Correlation Between Sunstone Hotel and Waste Management
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Sunstone Hotel and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Waste Management.
Diversification Opportunities for Sunstone Hotel and Waste Management
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunstone and Waste is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Waste Management go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Waste Management
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 1.41 times more return on investment than Waste Management. However, Sunstone Hotel is 1.41 times more volatile than Waste Management. It trades about 0.05 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 849.00 in Sunstone Hotel Investors on September 25, 2024 and sell it today you would earn a total of 301.00 from holding Sunstone Hotel Investors or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Waste Management
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Waste Management |
Sunstone Hotel and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Waste Management
The main advantage of trading using opposite Sunstone Hotel and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management'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 |
| Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Microsoft |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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