Correlation Between Suntrust Home and LFM Properties

Can any of the company-specific risk be diversified away by investing in both Suntrust Home and LFM Properties 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 LFM Properties 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 LFM Properties Corp, you can compare the effects of market volatilities on Suntrust Home and LFM Properties 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 LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntrust Home and LFM Properties.

Diversification Opportunities for Suntrust Home and LFM Properties

-0.14

Correlation Coefficient

Suntrust Home  LFM Properties

Good diversification

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

Pair Corralation between Suntrust Home and LFM Properties

Assuming the 90 days trading horizon Suntrust Home is expected to generate 1.6 times less return on investment than LFM Properties. But when comparing it to its historical volatility, Suntrust Home Developers is 2.1 times less risky than LFM Properties. It trades about 0.02 of its potential returns per unit of risk. LFM Properties Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Suntrust Home Developers  vs.  LFM Properties Corp

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.

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.

Pair Trading with Suntrust Home and LFM Properties

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

The idea behind Suntrust Home Developers and LFM Properties Corp 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..