Correlation Between Sunstone Hotel and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and SHELF DRILLING 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on Sunstone Hotel and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and SHELF DRILLING.
Diversification Opportunities for Sunstone Hotel and SHELF DRILLING
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sunstone and SHELF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and SHELF DRILLING go up and down completely randomly.
Pair Corralation between Sunstone Hotel and SHELF DRILLING
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.69 times more return on investment than SHELF DRILLING. However, Sunstone Hotel Investors is 1.45 times less risky than SHELF DRILLING. It trades about -0.21 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.24 per unit of risk. If you would invest 892.00 in Sunstone Hotel Investors on January 14, 2025 and sell it today you would lose (162.00) from holding Sunstone Hotel Investors or give up 18.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. SHELF DRILLING LTD
Performance |
| Timeline |
| Sunstone Hotel Investors |
| SHELF DRILLING LTD |
Sunstone Hotel and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and SHELF DRILLING
The main advantage of trading using opposite Sunstone Hotel and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| Sunstone Hotel vs. Scandium International Mining | Sunstone Hotel vs. SmarTone Telecommunications Holdings | Sunstone Hotel vs. Zijin Mining Group | Sunstone Hotel vs. MAG SILVER |
| SHELF DRILLING vs. Harmony Gold Mining | SHELF DRILLING vs. MAGNUM MINING EXP | SHELF DRILLING vs. PKSHA TECHNOLOGY INC | SHELF DRILLING vs. Perseus Mining Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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