Correlation Between Nordon Indstrias and Sun Communities

Can any of the company-specific risk be diversified away by investing in both Nordon Indstrias 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 Nordon Indstrias and Sun Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordon Indstrias Metalrgicas and Sun Communities, you can compare the effects of market volatilities on Nordon Indstrias 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 Nordon Indstrias with a short position of Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and Sun Communities.

Diversification Opportunities for Nordon Indstrias and Sun Communities

0.38

Correlation Coefficient

Nordon Indstrias  Sun Communities

Weak diversification

The 3 months correlation between Nordon and Sun is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities and Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and Sun Communities go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Sun Communities

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to under-perform the Sun Communities. In addition to that, Nordon Indstrias is 2.11 times more volatile than Sun Communities. It trades about -0.19 of its total potential returns per unit of risk. Sun Communities is currently generating about -0.05 per unit of volatility. If you would invest  3,966  in Sun Communities on September 17, 2024 and sell it today you would lose (302.00) from holding Sun Communities or give up 7.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nordon Indstrias Metalrgicas  vs.  Sun Communities

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sun Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nordon Indstrias and Sun Communities

The main advantage of trading using opposite Nordon Indstrias and Sun Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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.

The idea behind Nordon Indstrias Metalrgicas and Sun Communities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to 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.