Correlation Between Sunstone Hotel and Jacquet Metal

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

Diversification Opportunities for Sunstone Hotel and Jacquet Metal

-0.76

Correlation Coefficient

Sunstone Hotel  Jacquet Metal

Pay attention - limited upside

The 3 months correlation between Sunstone and Jacquet is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Jacquet Metal go up and down completely randomly.

Pair Corralation between Sunstone Hotel and Jacquet Metal

Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Jacquet Metal. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 1.65 times less risky than Jacquet Metal. The stock trades about -0.24 of its potential returns per unit of risk. The Jacquet Metal Service is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,690  in Jacquet Metal Service on December 24, 2024 and sell it today you would earn a total of  400.00  from holding Jacquet Metal Service or generate 23.67% return on investment over 90 days.

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

Sunstone Hotel Investors  vs.  Jacquet Metal Service

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Jacquet Metal Service

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunstone Hotel and Jacquet Metal

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

The idea behind Sunstone Hotel Investors and Jacquet Metal Service 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.