Correlation Between Suntrust Home and Rizal Commercial

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

Diversification Opportunities for Suntrust Home and Rizal Commercial

-0.02

Correlation Coefficient

Suntrust Home  Rizal Commercial

Good diversification

The 3 months correlation between Suntrust and Rizal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and Rizal Commercial Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rizal Commercial Banking 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 Rizal Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rizal Commercial Banking has no effect on the direction of Suntrust Home i.e., Suntrust Home and Rizal Commercial go up and down completely randomly.

Pair Corralation between Suntrust Home and Rizal Commercial

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 0.95 times more return on investment than Rizal Commercial. However, Suntrust Home Developers is 1.06 times less risky than Rizal Commercial. It trades about -0.01 of its potential returns per unit of risk. Rizal Commercial Banking is currently generating about -0.07 per unit of risk. If you would invest  87.00  in Suntrust Home Developers on September 26, 2024 and sell it today you would lose (2.00) from holding Suntrust Home Developers or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.33%
Values	Daily Returns

Suntrust Home Developers  vs.  Rizal Commercial Banking

Suntrust Home Developers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntrust Home Developers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Suntrust Home is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rizal Commercial Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rizal Commercial Banking 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 Rizal Commercial

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

The idea behind Suntrust Home Developers and Rizal Commercial Banking 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.