Correlation Between Suzano SA and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Suzano SA 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 Suzano SA and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzano SA and Sunstone Hotel Investors, you can compare the effects of market volatilities on Suzano SA 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 Suzano SA with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzano SA and Sunstone Hotel.
Diversification Opportunities for Suzano SA and Sunstone Hotel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suzano and Sunstone is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Suzano SA 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 Suzano SA 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 Suzano SA 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 Suzano SA i.e., Suzano SA and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Suzano SA and Sunstone Hotel
Assuming the 90 days trading horizon Suzano SA is expected to generate 1.49 times less return on investment than Sunstone Hotel. But when comparing it to its historical volatility, Suzano SA is 1.29 times less risky than Sunstone Hotel. It trades about 0.14 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 931.00 in Sunstone Hotel Investors on September 26, 2024 and sell it today you would earn a total of 209.00 from holding Sunstone Hotel Investors or generate 22.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Suzano SA vs. Sunstone Hotel Investors
Performance |
Timeline |
Suzano SA |
Sunstone Hotel Investors |
Suzano SA and Sunstone Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Suzano SA and Sunstone Hotel
The main advantage of trading using opposite Suzano SA and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzano SA 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.Suzano SA vs. Sunstone Hotel Investors | Suzano SA vs. GigaMedia | Suzano SA vs. Live Nation Entertainment | Suzano SA vs. Meli Hotels International |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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