Correlation Between Sunstone Hotel and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and MELIA HOTELS 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 MELIA HOTELS 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 MELIA HOTELS, you can compare the effects of market volatilities on Sunstone Hotel and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and MELIA HOTELS.
Diversification Opportunities for Sunstone Hotel and MELIA HOTELS
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and MELIA is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Sunstone Hotel and MELIA HOTELS
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 1.54 times more return on investment than MELIA HOTELS. However, Sunstone Hotel is 1.54 times more volatile than MELIA HOTELS. It trades about 0.16 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.14 per unit of risk. If you would invest 950.00 in Sunstone Hotel Investors on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Sunstone Hotel Investors or generate 7.37% 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. MELIA HOTELS
Performance |
| Timeline |
| Sunstone Hotel Investors |
| MELIA HOTELS |
Sunstone Hotel and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and MELIA HOTELS
The main advantage of trading using opposite Sunstone Hotel and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| Sunstone Hotel vs. ADRIATIC METALS LS 013355 | Sunstone Hotel vs. GALENA MINING LTD | Sunstone Hotel vs. Ross Stores | Sunstone Hotel vs. Perseus Mining Limited |
| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Microsoft | MELIA HOTELS vs. Microsoft |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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