Correlation Between Sunstone Hotel and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Omega Healthcare 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 Omega Healthcare 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 Omega Healthcare Investors, you can compare the effects of market volatilities on Sunstone Hotel and Omega Healthcare 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 Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Omega Healthcare.
Diversification Opportunities for Sunstone Hotel and Omega Healthcare
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunstone and Omega is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Omega Healthcare go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Omega Healthcare
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.7 times more return on investment than Omega Healthcare. However, Sunstone Hotel Investors is 1.44 times less risky than Omega Healthcare. It trades about -0.04 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.13 per unit of risk. If you would invest 1,121 in Sunstone Hotel Investors on November 3, 2024 and sell it today you would lose (21.00) from holding Sunstone Hotel Investors or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Omega Healthcare Investors
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Omega Healthcare Inv |
Sunstone Hotel and Omega Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Omega Healthcare
The main advantage of trading using opposite Sunstone Hotel and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.| Sunstone Hotel vs. Firan Technology Group | Sunstone Hotel vs. AAC TECHNOLOGHLDGADR | Sunstone Hotel vs. Dalata Hotel Group | Sunstone Hotel vs. HYATT HOTELS A |
| Omega Healthcare vs. Aya Gold Silver | Omega Healthcare vs. Tencent Music Entertainment | Omega Healthcare vs. Nexstar Media Group | Omega Healthcare vs. Urban Outfitters |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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