Correlation Between Sunstone Hotel and Dow
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Dow at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sunstone Hotel and Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunstone Hotel Investors and Dow Inc, you can compare the effects of market volatilities on Sunstone Hotel and Dow and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sunstone Hotel with a short position of Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Dow.
Diversification Opportunities for Sunstone Hotel and Dow
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunstone and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Sunstone Hotel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sunstone Hotel Investors are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Dow go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Dow
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 1.14 times more return on investment than Dow. However, Sunstone Hotel is 1.14 times more volatile than Dow Inc. It trades about 0.04 of its potential returns per unit of risk. Dow Inc is currently generating about -0.02 per unit of risk. If you would invest 894.00 in Sunstone Hotel Investors on August 29, 2024 and sell it today you would earn a total of 126.00 from holding Sunstone Hotel Investors or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Dow Inc
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Dow Inc |
Sunstone Hotel and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Dow
The main advantage of trading using opposite Sunstone Hotel and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Dow can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow will offset losses from the drop in Dow's long position.| Sunstone Hotel vs. ADRIATIC METALS LS 013355 | Sunstone Hotel vs. GALENA MINING LTD | Sunstone Hotel vs. Ross Stores | Sunstone Hotel vs. Perseus Mining Limited |
| Dow vs. Sunstone Hotel Investors | Dow vs. COMINTL BANK ADR1 | Dow vs. HYATT HOTELS A | Dow vs. JSC Halyk bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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