Correlation Between Suntrust Home and Cebu Air

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

Diversification Opportunities for Suntrust Home and Cebu Air

0.13

Correlation Coefficient

Suntrust Home  Cebu Air

Average diversification

The 3 months correlation between Suntrust and Cebu is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and Cebu Air Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air Preferred 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air Preferred has no effect on the direction of Suntrust Home i.e., Suntrust Home and Cebu Air go up and down completely randomly.

Pair Corralation between Suntrust Home and Cebu Air

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 2.6 times more return on investment than Cebu Air. However, Suntrust Home is 2.6 times more volatile than Cebu Air Preferred. It trades about 0.02 of its potential returns per unit of risk. Cebu Air Preferred is currently generating about 0.0 per unit of risk. If you would invest  84.00  in Suntrust Home Developers on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Suntrust Home Developers or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.43%
Values	Daily Returns

Suntrust Home Developers  vs.  Cebu Air Preferred

Suntrust Home Developers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Cebu Air Preferred

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cebu Air Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Cebu Air is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Suntrust Home and Cebu Air

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

The idea behind Suntrust Home Developers and Cebu Air Preferred 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.