Correlation Between Sunstone Hotel and Fresnillo Plc
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Fresnillo Plc 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 Fresnillo Plc 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 Fresnillo plc, you can compare the effects of market volatilities on Sunstone Hotel and Fresnillo Plc 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 Fresnillo Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Fresnillo Plc.
Diversification Opportunities for Sunstone Hotel and Fresnillo Plc
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunstone and Fresnillo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Fresnillo plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo plc 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 Fresnillo Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo plc has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Fresnillo Plc go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Fresnillo Plc
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Fresnillo Plc. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 1.54 times less risky than Fresnillo Plc. The stock trades about -0.22 of its potential returns per unit of risk. The Fresnillo plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 799.00 in Fresnillo plc on November 6, 2024 and sell it today you would earn a total of 48.00 from holding Fresnillo plc or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Fresnillo plc
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Fresnillo plc |
Sunstone Hotel and Fresnillo Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Fresnillo Plc
The main advantage of trading using opposite Sunstone Hotel and Fresnillo Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Fresnillo Plc 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 Fresnillo Plc will offset losses from the drop in Fresnillo Plc's long position.| Sunstone Hotel vs. SBM OFFSHORE | Sunstone Hotel vs. Ares Management Corp | Sunstone Hotel vs. STGEORGE MINING LTD | Sunstone Hotel vs. Cardinal Health |
| Fresnillo Plc vs. ALBIS LEASING AG | Fresnillo Plc vs. Lendlease Group | Fresnillo Plc vs. WESANA HEALTH HOLD | Fresnillo Plc vs. NIGHTINGALE HEALTH EO |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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