Correlation Between Mid America and Sun Communities
Can any of the company-specific risk be diversified away by investing in both Mid America 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 Mid America and Sun Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid America Apartment Communities and Sun Communities, you can compare the effects of market volatilities on Mid America 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 Mid America with a short position of Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid America and Sun Communities.
Diversification Opportunities for Mid America and Sun Communities
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mid and Sun is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mid America Apartment Communit and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and Mid America 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 Mid America Apartment 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 Mid America i.e., Mid America and Sun Communities go up and down completely randomly.
Pair Corralation between Mid America and Sun Communities
Considering the 90-day investment horizon Mid America Apartment Communities is expected to generate 0.75 times more return on investment than Sun Communities. However, Mid America Apartment Communities is 1.34 times less risky than Sun Communities. It trades about 0.16 of its potential returns per unit of risk. Sun Communities is currently generating about 0.07 per unit of risk. If you would invest 13,103 in Mid America Apartment Communities on August 30, 2024 and sell it today you would earn a total of 3,213 from holding Mid America Apartment Communities or generate 24.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid America Apartment Communit vs. Sun Communities
Performance |
| Timeline |
| Mid America Apartment |
| Sun Communities |
Mid America and Sun Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid America and Sun Communities
The main advantage of trading using opposite Mid America and Sun Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid America 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.| Mid America vs. AvalonBay Communities | Mid America vs. Essex Property Trust | Mid America vs. Equity Residential | Mid America vs. UDR Inc |
| Sun Communities vs. Clipper Realty | Sun Communities vs. UDR Inc | Sun Communities vs. UMH Properties | Sun Communities vs. Apartment Investment and |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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