Correlation Between Sunstone Hotel and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Wayside Technology 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 Wayside Technology 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 Wayside Technology Group, you can compare the effects of market volatilities on Sunstone Hotel and Wayside Technology 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 Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Wayside Technology.
Diversification Opportunities for Sunstone Hotel and Wayside Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunstone and Wayside is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Wayside Technology go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Wayside Technology
Assuming the 90 days horizon Sunstone Hotel is expected to generate 1.86 times less return on investment than Wayside Technology. But when comparing it to its historical volatility, Sunstone Hotel Investors is 1.33 times less risky than Wayside Technology. It trades about 0.29 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 9,137 in Wayside Technology Group on September 5, 2024 and sell it today you would earn a total of 3,663 from holding Wayside Technology Group or generate 40.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Wayside Technology Group
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Wayside Technology |
Sunstone Hotel and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Wayside Technology
The main advantage of trading using opposite Sunstone Hotel and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Wayside Technology 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 Wayside Technology will offset losses from the drop in Wayside Technology'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 |
| Wayside Technology vs. NH HOTEL GROUP | Wayside Technology vs. SMA Solar Technology | Wayside Technology vs. Sunstone Hotel Investors | Wayside Technology vs. Xenia Hotels Resorts |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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