Correlation Between Sunstone Hotel and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and NH HOTEL 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 NH HOTEL 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 NH HOTEL GROUP, you can compare the effects of market volatilities on Sunstone Hotel and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and NH HOTEL.
Diversification Opportunities for Sunstone Hotel and NH HOTEL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and NH5 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and NH HOTEL go up and down completely randomly.
Pair Corralation between Sunstone Hotel and NH HOTEL
Assuming the 90 days horizon Sunstone Hotel is expected to generate 3.65 times less return on investment than NH HOTEL. But when comparing it to its historical volatility, Sunstone Hotel Investors is 1.98 times less risky than NH HOTEL. It trades about 0.03 of its potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 359.00 in NH HOTEL GROUP on November 6, 2024 and sell it today you would earn a total of 265.00 from holding NH HOTEL GROUP or generate 73.82% 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. NH HOTEL GROUP
Performance |
| Timeline |
| Sunstone Hotel Investors |
| NH HOTEL GROUP |
Sunstone Hotel and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and NH HOTEL
The main advantage of trading using opposite Sunstone Hotel and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL'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 |
| NH HOTEL vs. MOLSON RS BEVERAGE | NH HOTEL vs. MCEWEN MINING INC | NH HOTEL vs. STGEORGE MINING LTD | NH HOTEL vs. Tsingtao Brewery |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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