Correlation Between Suntrust Home and First Abacus

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

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

Diversification Opportunities for Suntrust Home and First Abacus

0.17

Correlation Coefficient

Suntrust Home  First Abacus

Average diversification

The 3 months correlation between Suntrust and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Suntrust Home 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 Suntrust Home Developers are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Suntrust Home i.e., Suntrust Home and First Abacus go up and down completely randomly.

Pair Corralation between Suntrust Home and First Abacus

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 0.4 times more return on investment than First Abacus. However, Suntrust Home Developers is 2.5 times less risky than First Abacus. It trades about 0.07 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.03 per unit of risk. If you would invest  80.00  in Suntrust Home Developers on September 17, 2024 and sell it today you would earn a total of  6.00  from holding Suntrust Home Developers or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	36.0%
Values	Daily Returns

Suntrust Home Developers  vs.  First Abacus Financial

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.

First Abacus Financial

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, First Abacus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Suntrust Home and First Abacus

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

The idea behind Suntrust Home Developers and First Abacus Financial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..