Correlation Between Sunstone Hotel and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Shin Etsu 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 Shin Etsu 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 Shin Etsu Chemical Co, you can compare the effects of market volatilities on Sunstone Hotel and Shin Etsu 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 Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Shin Etsu.
Diversification Opportunities for Sunstone Hotel and Shin Etsu
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunstone and Shin is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Shin Etsu go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Shin Etsu
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.98 times more return on investment than Shin Etsu. However, Sunstone Hotel Investors is 1.02 times less risky than Shin Etsu. It trades about 0.09 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.12 per unit of risk. If you would invest 992.00 in Sunstone Hotel Investors on November 6, 2024 and sell it today you would earn a total of 98.00 from holding Sunstone Hotel Investors or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Shin Etsu Chemical |
Sunstone Hotel and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Shin Etsu
The main advantage of trading using opposite Sunstone Hotel and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Shin Etsu 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 Shin Etsu will offset losses from the drop in Shin Etsu'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 |
| Shin Etsu vs. HYATT HOTELS A | Shin Etsu vs. Lendlease Group | Shin Etsu vs. Hyatt Hotels | Shin Etsu vs. Chesapeake Utilities |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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