Correlation Between Alexanders and Sunstone Hotel

Can any of the company-specific risk be diversified away by investing in both Alexanders and Sunstone Hotel 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 Alexanders and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alexanders and Sunstone Hotel Investors, you can compare the effects of market volatilities on Alexanders and Sunstone Hotel 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 Alexanders with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexanders and Sunstone Hotel.

Diversification Opportunities for Alexanders and Sunstone Hotel

-0.7

Correlation Coefficient

Alexanders  Sunstone Hotel

Excellent diversification

The 3 months correlation between Alexanders and Sunstone is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alexanders and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and Alexanders 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 Alexanders are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Alexanders i.e., Alexanders and Sunstone Hotel go up and down completely randomly.

Pair Corralation between Alexanders and Sunstone Hotel

Considering the 90-day investment horizon Alexanders is expected to generate 0.96 times more return on investment than Sunstone Hotel. However, Alexanders is 1.04 times less risky than Sunstone Hotel. It trades about 0.1 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.2 per unit of risk. If you would invest  19,511  in Alexanders on December 23, 2024 and sell it today you would earn a total of  1,707  from holding Alexanders or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alexanders  vs.  Sunstone Hotel Investors

Alexanders

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Alexanders may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sunstone Hotel Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunstone Hotel Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alexanders and Sunstone Hotel

The main advantage of trading using opposite Alexanders and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexanders position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.

The idea behind Alexanders and Sunstone Hotel Investors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.