Correlation Between Metro Retail and Suntrust Home
Can any of the company-specific risk be diversified away by investing in both Metro Retail and Suntrust Home 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 Metro Retail and Suntrust Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Retail Stores and Suntrust Home Developers, you can compare the effects of market volatilities on Metro Retail and Suntrust Home 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 Metro Retail with a short position of Suntrust Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Suntrust Home.
Diversification Opportunities for Metro Retail and Suntrust Home
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Suntrust is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Suntrust Home Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntrust Home Developers and Metro Retail 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 Metro Retail Stores are associated (or correlated) with Suntrust Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntrust Home Developers has no effect on the direction of Metro Retail i.e., Metro Retail and Suntrust Home go up and down completely randomly.
Pair Corralation between Metro Retail and Suntrust Home
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.6 times more return on investment than Suntrust Home. However, Metro Retail Stores is 1.67 times less risky than Suntrust Home. It trades about -0.02 of its potential returns per unit of risk. Suntrust Home Developers is currently generating about -0.02 per unit of risk. If you would invest 122.00 in Metro Retail Stores on August 29, 2024 and sell it today you would lose (1.00) from holding Metro Retail Stores or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.0% |
| Values | Daily Returns |
Metro Retail Stores vs. Suntrust Home Developers
Performance |
| Timeline |
| Metro Retail Stores |
| Suntrust Home Developers |
Metro Retail and Suntrust Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and Suntrust Home
The main advantage of trading using opposite Metro Retail and Suntrust Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, Suntrust Home 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 Suntrust Home will offset losses from the drop in Suntrust Home's long position.| Metro Retail vs. Allhome Corp | Metro Retail vs. Jollibee Foods Corp | Metro Retail vs. LFM Properties Corp | Metro Retail vs. Altus Property Ventures |
| Suntrust Home vs. Jollibee Foods Corp | Suntrust Home vs. Manila Mining Corp | Suntrust Home vs. Apex Mining Co | Suntrust Home vs. Crown Asia Chemicals |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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