Correlation Between Sun Communities and Mid America
Can any of the company-specific risk be diversified away by investing in both Sun Communities and Mid America 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 Mid America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Communities and Mid America Apartment Communities, you can compare the effects of market volatilities on Sun Communities and Mid America 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 Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Communities and Mid America.
Diversification Opportunities for Sun Communities and Mid America
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Mid is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sun Communities and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Sun Communities i.e., Sun Communities and Mid America go up and down completely randomly.
Pair Corralation between Sun Communities and Mid America
Considering the 90-day investment horizon Sun Communities is expected to generate 1.81 times less return on investment than Mid America. In addition to that, Sun Communities is 1.34 times more volatile than Mid America Apartment Communities. It trades about 0.07 of its total potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.16 per unit of volatility. 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 |
Sun Communities vs. Mid America Apartment Communit
Performance |
| Timeline |
| Sun Communities |
| Mid America Apartment |
Sun Communities and Mid America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Communities and Mid America
The main advantage of trading using opposite Sun Communities and Mid America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Communities position performs unexpectedly, Mid America 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 Mid America will offset losses from the drop in Mid America's long position.| Sun Communities vs. Clipper Realty | Sun Communities vs. UDR Inc | Sun Communities vs. UMH Properties | Sun Communities vs. Apartment Investment and |
| Mid America vs. AvalonBay Communities | Mid America vs. Essex Property Trust | Mid America vs. Equity Residential | Mid America vs. UDR Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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