Correlation Between Bank of America and Sun Life
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Sun Life Financial, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sun Life.
Diversification Opportunities for Bank of America and Sun Life
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Sun is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 America 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 Bank of America i.e., Bank of America and Sun Life go up and down completely randomly.
Pair Corralation between Bank of America and Sun Life
Assuming the 90 days trading horizon Bank of America is expected to generate 1.93 times more return on investment than Sun Life. However, Bank of America is 1.93 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 0.11 per unit of risk. If you would invest 1,727 in Bank of America on September 14, 2024 and sell it today you would earn a total of 670.00 from holding Bank of America or generate 38.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bank of America vs. Sun Life Financial
Performance |
| Timeline |
| Bank of America |
| Sun Life Financial |
Bank of America and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sun Life
The main advantage of trading using opposite Bank of America and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. CNJ Capital Investments | Bank of America vs. Bird Construction | Bank of America vs. Cogeco Communications | Bank of America vs. Brookfield Office Properties |
| Sun Life vs. Canlan Ice Sports | Sun Life vs. Precision Drilling | Sun Life vs. Nova Leap Health | Sun Life vs. NeuPath Health |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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