Correlation Between Suntrust Home and COL Financial

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

Diversification Opportunities for Suntrust Home and COL Financial

0.35

Correlation Coefficient

Suntrust Home  COL Financial

Weak diversification

The 3 months correlation between Suntrust and COL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial 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 COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Suntrust Home i.e., Suntrust Home and COL Financial go up and down completely randomly.

Pair Corralation between Suntrust Home and COL Financial

Assuming the 90 days trading horizon Suntrust Home Developers is expected to under-perform the COL Financial. In addition to that, Suntrust Home is 2.07 times more volatile than COL Financial Group. It trades about -0.08 of its total potential returns per unit of risk. COL Financial Group is currently generating about -0.03 per unit of volatility. If you would invest  165.00  in COL Financial Group on December 30, 2024 and sell it today you would lose (7.00) from holding COL Financial Group or give up 4.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.48%
Values	Daily Returns

Suntrust Home Developers  vs.  COL Financial Group

Suntrust Home Developers

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

COL Financial Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Suntrust Home and COL Financial

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

The idea behind Suntrust Home Developers and COL Financial Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.