Correlation Between Suntrust Home and National Reinsurance

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

Diversification Opportunities for Suntrust Home and National Reinsurance

-0.1

Correlation Coefficient

Suntrust Home  National Reinsurance

Good diversification

The 3 months correlation between Suntrust and National is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance 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 National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Suntrust Home i.e., Suntrust Home and National Reinsurance go up and down completely randomly.

Pair Corralation between Suntrust Home and National Reinsurance

Assuming the 90 days trading horizon Suntrust Home is expected to generate 8.52 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Suntrust Home Developers is 2.01 times less risky than National Reinsurance. It trades about 0.01 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  58.00  in National Reinsurance on October 5, 2024 and sell it today you would earn a total of  9.00  from holding National Reinsurance or generate 15.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.82%
Values	Daily Returns

Suntrust Home Developers  vs.  National Reinsurance

Suntrust Home Developers

Risk-Adjusted Performance

0 of 100

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.

National Reinsurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Reinsurance 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Suntrust Home and National Reinsurance

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

The idea behind Suntrust Home Developers and National Reinsurance 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.