Correlation Between Cogeco Communications and Sun Life
Can any of the company-specific risk be diversified away by investing in both Cogeco Communications 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 Cogeco Communications and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogeco Communications and Sun Life Non, you can compare the effects of market volatilities on Cogeco Communications 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 Cogeco Communications with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Sun Life.
Diversification Opportunities for Cogeco Communications and Sun Life
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogeco and Sun is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non and Cogeco Communications 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 Cogeco Communications 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 Non has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Sun Life go up and down completely randomly.
Pair Corralation between Cogeco Communications and Sun Life
Assuming the 90 days trading horizon Cogeco Communications is expected to generate 2.76 times less return on investment than Sun Life. In addition to that, Cogeco Communications is 3.09 times more volatile than Sun Life Non. It trades about 0.04 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.3 per unit of volatility. If you would invest 1,590 in Sun Life Non on September 14, 2024 and sell it today you would earn a total of 56.00 from holding Sun Life Non or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogeco Communications vs. Sun Life Non
Performance |
| Timeline |
| Cogeco Communications |
| Sun Life Non |
Cogeco Communications and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogeco Communications and Sun Life
The main advantage of trading using opposite Cogeco Communications and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications 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.| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
| Sun Life vs. Westshore Terminals Investment | Sun Life vs. Canaf Investments | Sun Life vs. Highwood Asset Management | Sun Life vs. Canso Credit Trust |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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