Correlation Between Sunstone Hotel and Fair Isaac

Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Fair Isaac 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 Fair Isaac 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 Fair Isaac Corp, you can compare the effects of market volatilities on Sunstone Hotel and Fair Isaac 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 Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Fair Isaac.

Diversification Opportunities for Sunstone Hotel and Fair Isaac

0.37

Correlation Coefficient

Sunstone Hotel  Fair Isaac

Weak diversification

The 3 months correlation between Sunstone and Fair is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Fair Isaac go up and down completely randomly.

Pair Corralation between Sunstone Hotel and Fair Isaac

Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.32 times more return on investment than Fair Isaac. However, Sunstone Hotel Investors is 3.1 times less risky than Fair Isaac. It trades about -0.01 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about -0.41 per unit of risk. If you would invest  1,141  in Sunstone Hotel Investors on October 9, 2024 and sell it today you would lose (1.00) from holding Sunstone Hotel Investors or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Sunstone Hotel Investors  vs.  Fair Isaac Corp

Sunstone Hotel Investors

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunstone Hotel Investors are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sunstone Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Fair Isaac Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Isaac is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sunstone Hotel and Fair Isaac

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

The idea behind Sunstone Hotel Investors and Fair Isaac Corp 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.