Correlation Between Sun Communities and Equity Residential
Can any of the company-specific risk be diversified away by investing in both Sun Communities and Equity Residential 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 Sun Communities and Equity Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Communities and Equity Residential, you can compare the effects of market volatilities on Sun Communities and Equity Residential 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 Sun Communities with a short position of Equity Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Communities and Equity Residential.
Diversification Opportunities for Sun Communities and Equity Residential
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Equity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sun Communities and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential and Sun 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 Sun Communities are associated (or correlated) with Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Sun Communities i.e., Sun Communities and Equity Residential go up and down completely randomly.
Pair Corralation between Sun Communities and Equity Residential
Assuming the 90 days trading horizon Sun Communities is expected to generate 3.1 times less return on investment than Equity Residential. In addition to that, Sun Communities is 1.35 times more volatile than Equity Residential. It trades about 0.02 of its total potential returns per unit of risk. Equity Residential is currently generating about 0.06 per unit of volatility. If you would invest 14,587 in Equity Residential on September 29, 2024 and sell it today you would earn a total of 7,495 from holding Equity Residential or generate 51.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Sun Communities vs. Equity Residential
Performance |
| Timeline |
| Sun Communities |
| Equity Residential |
Sun Communities and Equity Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Communities and Equity Residential
The main advantage of trading using opposite Sun Communities and Equity Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Communities position performs unexpectedly, Equity Residential 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 Equity Residential will offset losses from the drop in Equity Residential's long position.| Sun Communities vs. Equity Residential | Sun Communities vs. AvalonBay Communities | Sun Communities vs. Mid America Apartment Communities | Sun Communities vs. Essex Property Trust |
| Equity Residential vs. AvalonBay Communities | Equity Residential vs. Mid America Apartment Communities | Equity Residential vs. Sun Communities | Equity Residential vs. Essex Property Trust |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges |