Correlation Between Sunstone Hotel and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on Sunstone Hotel and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Pernod Ricard.
Diversification Opportunities for Sunstone Hotel and Pernod Ricard
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sunstone and Pernod is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Pernod Ricard go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Pernod Ricard
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Pernod Ricard. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 1.3 times less risky than Pernod Ricard. The stock trades about -0.08 of its potential returns per unit of risk. The Pernod Ricard SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,850 in Pernod Ricard SA on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Pernod Ricard SA or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Pernod Ricard SA
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Pernod Ricard SA |
Sunstone Hotel and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Pernod Ricard
The main advantage of trading using opposite Sunstone Hotel and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| Sunstone Hotel vs. Firan Technology Group | Sunstone Hotel vs. AAC TECHNOLOGHLDGADR | Sunstone Hotel vs. Dalata Hotel Group | Sunstone Hotel vs. HYATT HOTELS A |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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