Correlation Between Sun Communities and Clipper Realty

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

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

Diversification Opportunities for Sun Communities and Clipper Realty

0.06

Correlation Coefficient

Sun Communities  Clipper Realty

Significant diversification

The 3 months correlation between Sun and Clipper is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sun Communities and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty and Sun Communities 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 Sun Communities are associated (or correlated) with Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of Sun Communities i.e., Sun Communities and Clipper Realty go up and down completely randomly.

Pair Corralation between Sun Communities and Clipper Realty

Considering the 90-day investment horizon Sun Communities is expected to under-perform the Clipper Realty. But the stock apears to be less risky and, when comparing its historical volatility, Sun Communities is 2.14 times less risky than Clipper Realty. The stock trades about -0.04 of its potential returns per unit of risk. The Clipper Realty is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  415.00  in Clipper Realty on August 10, 2024 and sell it today you would earn a total of  194.00  from holding Clipper Realty or generate 46.75% return on investment over 90 days.

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

Sun Communities  vs.  Clipper Realty

Sun Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sun Communities is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Clipper Realty

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clipper Realty are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Clipper Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Communities and Clipper Realty

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

The idea behind Sun Communities and Clipper Realty 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.