Correlation Between Sunstone Hotel and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications Holdings, you can compare the effects of market volatilities on Sunstone Hotel and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Consolidated Communications.
Diversification Opportunities for Sunstone Hotel and Consolidated Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and Consolidated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Consolidated Communications go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Consolidated Communications
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 2.24 times more return on investment than Consolidated Communications. However, Sunstone Hotel is 2.24 times more volatile than Consolidated Communications Holdings. It trades about 0.13 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.21 per unit of risk. If you would invest 920.00 in Sunstone Hotel Investors on August 31, 2024 and sell it today you would earn a total of 90.00 from holding Sunstone Hotel Investors or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Consolidated Communications Ho
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Consolidated Communications |
Sunstone Hotel and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Consolidated Communications
The main advantage of trading using opposite Sunstone Hotel and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Sunstone Hotel vs. LG Display Co | Sunstone Hotel vs. YOOMA WELLNESS INC | Sunstone Hotel vs. Tencent Music Entertainment | Sunstone Hotel vs. FEMALE HEALTH |
| Consolidated Communications vs. T Mobile | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Deutsche Telekom AG | Consolidated Communications vs. Superior Plus Corp |
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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