Correlation Between Apple and SUN LIFE
Can any of the company-specific risk be diversified away by investing in both Apple and SUN LIFE 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 Apple and SUN LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SUN LIFE FINANCIAL, you can compare the effects of market volatilities on Apple and SUN LIFE 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 Apple with a short position of SUN LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SUN LIFE.
Diversification Opportunities for Apple and SUN LIFE
Poor diversification
The 3 months correlation between Apple and SUN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SUN LIFE FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN LIFE FINANCIAL and Apple 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 Apple Inc are associated (or correlated) with SUN LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN LIFE FINANCIAL has no effect on the direction of Apple i.e., Apple and SUN LIFE go up and down completely randomly.
Pair Corralation between Apple and SUN LIFE
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.58 times more return on investment than SUN LIFE. However, Apple is 1.58 times more volatile than SUN LIFE FINANCIAL. It trades about -0.1 of its potential returns per unit of risk. SUN LIFE FINANCIAL is currently generating about -0.17 per unit of risk. If you would invest 23,545 in Apple Inc on October 14, 2024 and sell it today you would lose (400.00) from holding Apple Inc or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SUN LIFE FINANCIAL
Performance |
| Timeline |
| Apple Inc |
| SUN LIFE FINANCIAL |
Apple and SUN LIFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SUN LIFE
The main advantage of trading using opposite Apple and SUN LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SUN LIFE 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 LIFE will offset losses from the drop in SUN LIFE's long position.| Apple vs. Salesforce | Apple vs. Shenandoah Telecommunications | Apple vs. Tradeweb Markets | Apple vs. Fast Retailing Co |
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.
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