Correlation Between Senvest Capital and Sun Residential

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

By analyzing existing cross correlation between Senvest Capital and Sun Residential Real, you can compare the effects of market volatilities on Senvest Capital and Sun Residential 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 Senvest Capital with a short position of Sun Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senvest Capital and Sun Residential.

Diversification Opportunities for Senvest Capital and Sun Residential

0.46

Correlation Coefficient

Senvest Capital  Sun Residential

Very weak diversification

The 3 months correlation between Senvest and Sun is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Sun Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Residential Real and Senvest Capital 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 Senvest Capital are associated (or correlated) with Sun Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Residential Real has no effect on the direction of Senvest Capital i.e., Senvest Capital and Sun Residential go up and down completely randomly.

Pair Corralation between Senvest Capital and Sun Residential

Assuming the 90 days trading horizon Senvest Capital is expected to under-perform the Sun Residential. But the stock apears to be less risky and, when comparing its historical volatility, Senvest Capital is 3.51 times less risky than Sun Residential. The stock trades about -0.02 of its potential returns per unit of risk. The Sun Residential Real is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5.28  in Sun Residential Real on January 25, 2024 and sell it today you would lose (0.78) from holding Sun Residential Real or give up 14.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Senvest Capital  vs.  Sun Residential Real

Senvest Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senvest Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sun Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Senvest Capital and Sun Residential

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

The idea behind Senvest Capital and Sun Residential Real 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.