Correlation Between Suntrust Home and BDO Unibank

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Can any of the company-specific risk be diversified away by investing in both Suntrust Home and BDO Unibank 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 BDO Unibank 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 BDO Unibank, you can compare the effects of market volatilities on Suntrust Home and BDO Unibank 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 BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntrust Home and BDO Unibank.

Diversification Opportunities for Suntrust Home and BDO Unibank

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Suntrust and BDO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank 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 BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of Suntrust Home i.e., Suntrust Home and BDO Unibank go up and down completely randomly.

Pair Corralation between Suntrust Home and BDO Unibank

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 1.6 times more return on investment than BDO Unibank. However, Suntrust Home is 1.6 times more volatile than BDO Unibank. It trades about -0.02 of its potential returns per unit of risk. BDO Unibank is currently generating about -0.05 per unit of risk. If you would invest  90.00  in Suntrust Home Developers on October 26, 2024 and sell it today you would lose (4.00) from holding Suntrust Home Developers or give up 4.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy62.07%
ValuesDaily Returns

Suntrust Home Developers  vs.  BDO Unibank

 Performance 
       Timeline  
Suntrust Home Developers 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Suntrust Home Developers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Suntrust Home is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
BDO Unibank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BDO Unibank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Suntrust Home and BDO Unibank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Suntrust Home and BDO Unibank

The main advantage of trading using opposite Suntrust Home and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntrust Home position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.
The idea behind Suntrust Home Developers and BDO Unibank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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