Correlation Between Sunstone Hotel and Chevron
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Chevron 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 Chevron 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 Chevron, you can compare the effects of market volatilities on Sunstone Hotel and Chevron 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 Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Chevron.
Diversification Opportunities for Sunstone Hotel and Chevron
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and Chevron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Chevron go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Chevron
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 2.56 times more return on investment than Chevron. However, Sunstone Hotel is 2.56 times more volatile than Chevron. It trades about 0.29 of its potential returns per unit of risk. Chevron is currently generating about 0.02 per unit of risk. If you would invest 985.00 in Sunstone Hotel Investors on September 14, 2024 and sell it today you would earn a total of 175.00 from holding Sunstone Hotel Investors or generate 17.77% 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. Chevron
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Chevron |
Sunstone Hotel and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Chevron
The main advantage of trading using opposite Sunstone Hotel and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Chevron 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 Chevron will offset losses from the drop in Chevron's long position.| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Xenia Hotels Resorts | Sunstone Hotel vs. Summit Hotel Properties | Sunstone Hotel vs. ASHFORD HOSPITTRUST |
| Chevron vs. Park Hotels Resorts | Chevron vs. NH HOTEL GROUP | Chevron vs. Sunstone Hotel Investors | Chevron vs. Xenia Hotels Resorts |
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 CEOs Directory module to screen CEOs from public companies around the world.
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