Correlation Between LFM Properties and Suntrust Home

Can any of the company-specific risk be diversified away by investing in both LFM Properties and Suntrust Home 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 LFM Properties and Suntrust Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LFM Properties Corp and Suntrust Home Developers, you can compare the effects of market volatilities on LFM Properties and Suntrust Home 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 LFM Properties with a short position of Suntrust Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and Suntrust Home.

Diversification Opportunities for LFM Properties and Suntrust Home

-0.14

Correlation Coefficient

LFM Properties  Suntrust Home

Good diversification

The 3 months correlation between LFM and Suntrust is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp and Suntrust Home Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntrust Home Developers and LFM 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 LFM Properties Corp are associated (or correlated) with Suntrust Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntrust Home Developers has no effect on the direction of LFM Properties i.e., LFM Properties and Suntrust Home go up and down completely randomly.

Pair Corralation between LFM Properties and Suntrust Home

Assuming the 90 days trading horizon LFM Properties Corp is expected to generate 2.1 times more return on investment than Suntrust Home. However, LFM Properties is 2.1 times more volatile than Suntrust Home Developers. It trades about 0.01 of its potential returns per unit of risk. Suntrust Home Developers is currently generating about 0.02 per unit of risk. If you would invest  5.10  in LFM Properties Corp on September 17, 2024 and sell it today you would lose (0.10) from holding LFM Properties Corp or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

LFM Properties Corp  vs.  Suntrust Home Developers

LFM Properties Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LFM Properties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Suntrust Home Developers

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Suntrust Home may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LFM Properties and Suntrust Home

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

The idea behind LFM Properties Corp and Suntrust Home Developers 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.