Correlation Between Suntrust Home and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both Suntrust Home and Figaro Coffee 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 Suntrust Home and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntrust Home Developers and Figaro Coffee Group, you can compare the effects of market volatilities on Suntrust Home and Figaro Coffee 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 Suntrust Home with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntrust Home and Figaro Coffee.
Diversification Opportunities for Suntrust Home and Figaro Coffee
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Suntrust and Figaro is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and Figaro Coffee Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figaro Coffee Group and Suntrust Home 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 Suntrust Home Developers are associated (or correlated) with Figaro Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figaro Coffee Group has no effect on the direction of Suntrust Home i.e., Suntrust Home and Figaro Coffee go up and down completely randomly.
Pair Corralation between Suntrust Home and Figaro Coffee
Assuming the 90 days trading horizon Suntrust Home is expected to generate 2.89 times less return on investment than Figaro Coffee. In addition to that, Suntrust Home is 1.22 times more volatile than Figaro Coffee Group. It trades about 0.01 of its total potential returns per unit of risk. Figaro Coffee Group is currently generating about 0.04 per unit of volatility. If you would invest 58.00 in Figaro Coffee Group on August 27, 2024 and sell it today you would earn a total of 22.00 from holding Figaro Coffee Group or generate 37.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.96% |
| Values | Daily Returns |
Suntrust Home Developers vs. Figaro Coffee Group
Performance |
| Timeline |
| Suntrust Home Developers |
| Figaro Coffee Group |
Suntrust Home and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntrust Home and Figaro Coffee
The main advantage of trading using opposite Suntrust Home and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntrust Home position performs unexpectedly, Figaro Coffee 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 Figaro Coffee will offset losses from the drop in Figaro Coffee's long position.| Suntrust Home vs. Allhome Corp | Suntrust Home vs. Jollibee Foods Corp | Suntrust Home vs. LFM Properties Corp | Suntrust Home vs. PXP Energy Corp |
| Figaro Coffee vs. SM Investments Corp | Figaro Coffee vs. Suntrust Home Developers | Figaro Coffee vs. Allhome Corp | Figaro Coffee vs. Converge Information Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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