Correlation Between Suntrust Home and Premiere Entertainment

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

Diversification Opportunities for Suntrust Home and Premiere Entertainment

-0.42

Correlation Coefficient

Suntrust Home  Premiere Entertainment

Very good diversification

The 3 months correlation between Suntrust and Premiere is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment 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 Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Suntrust Home i.e., Suntrust Home and Premiere Entertainment go up and down completely randomly.

Pair Corralation between Suntrust Home and Premiere Entertainment

Assuming the 90 days trading horizon Suntrust Home Developers is expected to generate 1.03 times more return on investment than Premiere Entertainment. However, Suntrust Home is 1.03 times more volatile than Premiere Entertainment. It trades about 0.01 of its potential returns per unit of risk. Premiere Entertainment is currently generating about -0.03 per unit of risk. If you would invest  100.00  in Suntrust Home Developers on October 5, 2024 and sell it today you would lose (10.00) from holding Suntrust Home Developers or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.0%
Values	Daily Returns

Suntrust Home Developers  vs.  Premiere Entertainment

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.

Premiere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premiere Entertainment 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.

Pair Trading with Suntrust Home and Premiere Entertainment

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

The idea behind Suntrust Home Developers and Premiere Entertainment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.