Correlation Between Sun Communities and Apartment Investment

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

By analyzing existing cross correlation between Sun Communities and Apartment Investment and, you can compare the effects of market volatilities on Sun Communities and Apartment Investment 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 Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Communities and Apartment Investment.

Diversification Opportunities for Sun Communities and Apartment Investment

0.54

Correlation Coefficient

Sun Communities  Apartment Investment

Very weak diversification

The 3 months correlation between Sun and Apartment is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sun Communities and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of Sun Communities i.e., Sun Communities and Apartment Investment go up and down completely randomly.

Pair Corralation between Sun Communities and Apartment Investment

Considering the 90-day investment horizon Sun Communities is expected to under-perform the Apartment Investment. In addition to that, Sun Communities is 1.44 times more volatile than Apartment Investment and. It trades about -0.05 of its total potential returns per unit of risk. Apartment Investment and is currently generating about -0.03 per unit of volatility. If you would invest  906.00  in Apartment Investment and on September 2, 2024 and sell it today you would lose (22.00) from holding Apartment Investment and or give up 2.43% of portfolio value over 90 days.

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

Sun Communities  vs.  Apartment Investment and

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 fairly strong basic indicators, Sun Communities is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sun Communities and Apartment Investment

The main advantage of trading using opposite Sun Communities and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Communities position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.

The idea behind Sun Communities and Apartment Investment and 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.