Correlation Between Sunstone Hotel and AutoZone
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and AutoZone 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 AutoZone 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 AutoZone, you can compare the effects of market volatilities on Sunstone Hotel and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and AutoZone.
Diversification Opportunities for Sunstone Hotel and AutoZone
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sunstone and AutoZone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and AutoZone go up and down completely randomly.
Pair Corralation between Sunstone Hotel and AutoZone
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the AutoZone. In addition to that, Sunstone Hotel is 1.03 times more volatile than AutoZone. It trades about -0.2 of its total potential returns per unit of risk. AutoZone is currently generating about -0.13 per unit of volatility. If you would invest 319,400 in AutoZone on October 17, 2024 and sell it today you would lose (7,000) from holding AutoZone or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. AutoZone
Performance |
| Timeline |
| Sunstone Hotel Investors |
| AutoZone |
Sunstone Hotel and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and AutoZone
The main advantage of trading using opposite Sunstone Hotel and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.| Sunstone Hotel vs. Electronic Arts | Sunstone Hotel vs. INTERSHOP Communications Aktiengesellschaft | Sunstone Hotel vs. Ribbon Communications | Sunstone Hotel vs. CRISPR Therapeutics AG |
| AutoZone vs. The Yokohama Rubber | AutoZone vs. CITY OFFICE REIT | AutoZone vs. Summit Materials | AutoZone vs. NEWELL RUBBERMAID |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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