Correlation Between Sunstone Hotel and Equinix
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Equinix 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 Equinix 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 Equinix, you can compare the effects of market volatilities on Sunstone Hotel and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Equinix.
Diversification Opportunities for Sunstone Hotel and Equinix
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunstone and Equinix is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Equinix go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Equinix
Assuming the 90 days horizon Sunstone Hotel is expected to generate 2.4 times less return on investment than Equinix. In addition to that, Sunstone Hotel is 1.04 times more volatile than Equinix. It trades about 0.02 of its total potential returns per unit of risk. Equinix is currently generating about 0.06 per unit of volatility. If you would invest 63,061 in Equinix on September 4, 2024 and sell it today you would earn a total of 30,959 from holding Equinix or generate 49.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Equinix
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Equinix |
Sunstone Hotel and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Equinix
The main advantage of trading using opposite Sunstone Hotel and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Ryman Hospitality Properties | Sunstone Hotel vs. Park Hotels Resorts | Sunstone Hotel vs. Pebblebrook Hotel Trust |
| Equinix vs. Superior Plus Corp | Equinix vs. NMI Holdings | Equinix vs. Origin Agritech | Equinix vs. SIVERS SEMICONDUCTORS AB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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