Correlation Between Sunstone Hotel and DEUTSCHE WOHNEN
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on Sunstone Hotel and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and DEUTSCHE WOHNEN.
Diversification Opportunities for Sunstone Hotel and DEUTSCHE WOHNEN
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunstone and DEUTSCHE is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and DEUTSCHE WOHNEN go up and down completely randomly.
Pair Corralation between Sunstone Hotel and DEUTSCHE WOHNEN
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.51 times more return on investment than DEUTSCHE WOHNEN. However, Sunstone Hotel Investors is 1.94 times less risky than DEUTSCHE WOHNEN. It trades about -0.07 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about -0.44 per unit of risk. If you would invest 1,161 in Sunstone Hotel Investors on October 15, 2024 and sell it today you would lose (11.00) from holding Sunstone Hotel Investors or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. DEUTSCHE WOHNEN ADRS12
Performance |
| Timeline |
| Sunstone Hotel Investors |
| DEUTSCHE WOHNEN ADRS12 |
Sunstone Hotel and DEUTSCHE WOHNEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and DEUTSCHE WOHNEN
The main advantage of trading using opposite Sunstone Hotel and DEUTSCHE WOHNEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN will offset losses from the drop in DEUTSCHE WOHNEN's long position.| Sunstone Hotel vs. NH HOTEL GROUP | Sunstone Hotel vs. Sun Life Financial | Sunstone Hotel vs. Webster Financial | Sunstone Hotel vs. Park Hotels Resorts |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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