Correlation Between Americold Realty and Sun Communities

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

By analyzing existing cross correlation between Americold Realty Trust and Sun Communities, you can compare the effects of market volatilities on Americold Realty and Sun Communities 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 Americold Realty with a short position of Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americold Realty and Sun Communities.

Diversification Opportunities for Americold Realty and Sun Communities

0.84

Correlation Coefficient

Americold Realty  Sun Communities

Very poor diversification

The 3 months correlation between Americold and Sun is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Americold Realty Trust and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and Americold Realty 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 Americold Realty Trust are associated (or correlated) with Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of Americold Realty i.e., Americold Realty and Sun Communities go up and down completely randomly.

Pair Corralation between Americold Realty and Sun Communities

Given the investment horizon of 90 days Americold Realty Trust is expected to under-perform the Sun Communities. In addition to that, Americold Realty is 1.13 times more volatile than Sun Communities. It trades about -0.23 of its total potential returns per unit of risk. Sun Communities is currently generating about -0.15 per unit of volatility. If you would invest  13,971  in Sun Communities on September 20, 2024 and sell it today you would lose (1,930) from holding Sun Communities or give up 13.81% of portfolio value over 90 days.

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

Americold Realty Trust  vs.  Sun Communities

Americold Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Americold Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sun Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Americold Realty and Sun Communities

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

The idea behind Americold Realty Trust and Sun Communities 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.