Correlation Between Suntrust Home and DL Industries

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

Diversification Opportunities for Suntrust Home and DL Industries

-0.24

Correlation Coefficient

Suntrust Home  DL Industries

Very good diversification

The 3 months correlation between Suntrust and DNL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and DL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DL Industries 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 DL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DL Industries has no effect on the direction of Suntrust Home i.e., Suntrust Home and DL Industries go up and down completely randomly.

Pair Corralation between Suntrust Home and DL Industries

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 1.43 times more return on investment than DL Industries. However, Suntrust Home is 1.43 times more volatile than DL Industries. It trades about 0.07 of its potential returns per unit of risk. DL Industries is currently generating about -0.04 per unit of risk. If you would invest  80.00  in Suntrust Home Developers on September 17, 2024 and sell it today you would earn a total of  6.00  from holding Suntrust Home Developers or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

Suntrust Home Developers  vs.  DL Industries

Suntrust Home Developers

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Suntrust Home may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Suntrust Home and DL Industries

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

The idea behind Suntrust Home Developers and DL Industries 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.