Correlation Between Sunstone Hotel and ENDESA ADR/
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and ENDESA ADR/ 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 ENDESA ADR/ 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 ENDESA ADR 12, you can compare the effects of market volatilities on Sunstone Hotel and ENDESA ADR/ 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 ENDESA ADR/. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and ENDESA ADR/.
Diversification Opportunities for Sunstone Hotel and ENDESA ADR/
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and ENDESA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 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 ENDESA ADR/. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and ENDESA ADR/ go up and down completely randomly.
Pair Corralation between Sunstone Hotel and ENDESA ADR/
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.47 times more return on investment than ENDESA ADR/. However, Sunstone Hotel Investors is 2.11 times less risky than ENDESA ADR/. It trades about 0.08 of its potential returns per unit of risk. ENDESA ADR 12 is currently generating about -0.09 per unit of risk. If you would invest 1,131 in Sunstone Hotel Investors on October 7, 2024 and sell it today you would earn a total of 9.00 from holding Sunstone Hotel Investors or generate 0.8% 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. ENDESA ADR 12
Performance |
| Timeline |
| Sunstone Hotel Investors |
| ENDESA ADR 12 |
Sunstone Hotel and ENDESA ADR/ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and ENDESA ADR/
The main advantage of trading using opposite Sunstone Hotel and ENDESA ADR/ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, ENDESA ADR/ 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 ENDESA ADR/ will offset losses from the drop in ENDESA ADR/'s long position.The idea behind Sunstone Hotel Investors and ENDESA ADR 12 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ENDESA ADR/ vs. ALLFUNDS GROUP EO 0025 | ENDESA ADR/ vs. New Residential Investment | ENDESA ADR/ vs. AGNC INVESTMENT | ENDESA ADR/ vs. CDL INVESTMENT |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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