Correlation Between Sunstone Hotel and Walmart
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Sunstone Hotel and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Walmart.
Diversification Opportunities for Sunstone Hotel and Walmart
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and Walmart is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Walmart go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Walmart
Assuming the 90 days horizon Sunstone Hotel is expected to generate 2.29 times less return on investment than Walmart. In addition to that, Sunstone Hotel is 1.57 times more volatile than Walmart. It trades about 0.14 of its total potential returns per unit of risk. Walmart is currently generating about 0.51 per unit of volatility. If you would invest 7,500 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,200 from holding Walmart or generate 16.0% 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. Walmart
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Walmart |
Sunstone Hotel and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Walmart
The main advantage of trading using opposite Sunstone Hotel and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Sunstone Hotel vs. LG Display Co | Sunstone Hotel vs. YOOMA WELLNESS INC | Sunstone Hotel vs. Tencent Music Entertainment | Sunstone Hotel vs. FEMALE HEALTH |
| Walmart vs. Hyatt Hotels | Walmart vs. Ross Stores | Walmart vs. Sunstone Hotel Investors | Walmart vs. Retail Estates NV |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |