Correlation Between Sunstone Hotel and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Strategic Education 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 Strategic Education 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 Strategic Education, you can compare the effects of market volatilities on Sunstone Hotel and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Strategic Education.
Diversification Opportunities for Sunstone Hotel and Strategic Education
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and Strategic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Strategic Education go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Strategic Education
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Strategic Education. In addition to that, Sunstone Hotel is 1.3 times more volatile than Strategic Education. It trades about -0.06 of its total potential returns per unit of risk. Strategic Education is currently generating about 0.16 per unit of volatility. If you would invest 8,950 in Strategic Education on November 1, 2024 and sell it today you would earn a total of 300.00 from holding Strategic Education or generate 3.35% 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. Strategic Education
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Strategic Education |
Sunstone Hotel and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Strategic Education
The main advantage of trading using opposite Sunstone Hotel and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Xenia Hotels Resorts | Sunstone Hotel vs. Summit Hotel Properties |
| Strategic Education vs. ECHO INVESTMENT ZY | Strategic Education vs. CanSino Biologics | Strategic Education vs. Hisense Home Appliances | Strategic Education vs. Focus Home Interactive |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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