Correlation Between Service Properties and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Service Properties 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 Service Properties and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Properties Trust and Sunstone Hotel Investors, you can compare the effects of market volatilities on Service Properties 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 Service Properties with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Properties and Sunstone Hotel.
Diversification Opportunities for Service Properties and Sunstone Hotel
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Service and Sunstone is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust 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 Service Properties 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 Service Properties Trust 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 Service Properties i.e., Service Properties and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Service Properties and Sunstone Hotel
Considering the 90-day investment horizon Service Properties Trust is expected to generate 2.66 times more return on investment than Sunstone Hotel. However, Service Properties is 2.66 times more volatile than Sunstone Hotel Investors. It trades about 0.06 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 248.00 in Service Properties Trust on December 27, 2024 and sell it today you would earn a total of 29.00 from holding Service Properties Trust or generate 11.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Service Properties Trust vs. Sunstone Hotel Investors
Performance |
Timeline |
Service Properties Trust |
Sunstone Hotel Investors |
Service Properties and Sunstone Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Service Properties and Sunstone Hotel
The main advantage of trading using opposite Service Properties and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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.Service Properties vs. PennyMac Mortgage Investment | Service Properties vs. Luxfer Holdings PLC | Service Properties vs. MGIC Investment Corp | Service Properties vs. Dow Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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