Correlation Between Bank of the and Suntrust Home

Can any of the company-specific risk be diversified away by investing in both Bank of the and Suntrust Home 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 Bank of the and Suntrust Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of the and Suntrust Home Developers, you can compare the effects of market volatilities on Bank of the and Suntrust Home 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 Bank of the with a short position of Suntrust Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Suntrust Home.

Diversification Opportunities for Bank of the and Suntrust Home

0.14

Correlation Coefficient

Bank of the  Suntrust Home

Average diversification

The 3 months correlation between Bank and Suntrust is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Suntrust Home Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntrust Home Developers and Bank of the 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 Bank of the are associated (or correlated) with Suntrust Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntrust Home Developers has no effect on the direction of Bank of the i.e., Bank of the and Suntrust Home go up and down completely randomly.

Pair Corralation between Bank of the and Suntrust Home

Assuming the 90 days trading horizon Bank of the is expected to generate 0.49 times more return on investment than Suntrust Home. However, Bank of the is 2.05 times less risky than Suntrust Home. It trades about 0.02 of its potential returns per unit of risk. Suntrust Home Developers is currently generating about -0.01 per unit of risk. If you would invest  10,747  in Bank of the on April 20, 2025 and sell it today you would earn a total of  1,453  from holding Bank of the or generate 13.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.12%
Values	Daily Returns

Bank of the  vs.  Suntrust Home Developers

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

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.

Pair Trading with Bank of the and Suntrust Home

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

The idea behind Bank of the and Suntrust Home Developers 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.