Correlation Between AvalonBay Communities and Sun Communities
Can any of the company-specific risk be diversified away by investing in both AvalonBay Communities 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 AvalonBay Communities and Sun Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AvalonBay Communities and Sun Communities, you can compare the effects of market volatilities on AvalonBay Communities 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 AvalonBay Communities with a short position of Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AvalonBay Communities and Sun Communities.
Diversification Opportunities for AvalonBay Communities and Sun Communities
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between AvalonBay and Sun is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AvalonBay Communities and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and AvalonBay Communities 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 AvalonBay Communities 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 AvalonBay Communities i.e., AvalonBay Communities and Sun Communities go up and down completely randomly.
Pair Corralation between AvalonBay Communities and Sun Communities
Assuming the 90 days horizon AvalonBay Communities is expected to generate 0.71 times more return on investment than Sun Communities. However, AvalonBay Communities is 1.41 times less risky than Sun Communities. It trades about 0.06 of its potential returns per unit of risk. Sun Communities is currently generating about -0.03 per unit of risk. If you would invest 20,426 in AvalonBay Communities on September 24, 2024 and sell it today you would earn a total of 889.00 from holding AvalonBay Communities or generate 4.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AvalonBay Communities vs. Sun Communities
Performance |
Timeline |
AvalonBay Communities |
Sun Communities |
AvalonBay Communities and Sun Communities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AvalonBay Communities and Sun Communities
The main advantage of trading using opposite AvalonBay Communities and Sun Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AvalonBay Communities 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.AvalonBay Communities vs. Equity Residential | AvalonBay Communities vs. UDR Inc | AvalonBay Communities vs. INVITATION HOMES DL | AvalonBay Communities vs. Mid America Apartment Communities |
Sun Communities vs. Equity Residential | Sun Communities vs. AvalonBay Communities | Sun Communities vs. UDR Inc | Sun Communities vs. INVITATION HOMES DL |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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