Correlation Between Definity Financial and Sun Peak
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Sun Peak 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 Definity Financial and Sun Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Sun Peak Metals, you can compare the effects of market volatilities on Definity Financial and Sun Peak 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 Definity Financial with a short position of Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Sun Peak.
Diversification Opportunities for Definity Financial and Sun Peak
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Definity and Sun is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Definity Financial i.e., Definity Financial and Sun Peak go up and down completely randomly.
Pair Corralation between Definity Financial and Sun Peak
Assuming the 90 days trading horizon Definity Financial Corp is expected to under-perform the Sun Peak. But the stock apears to be less risky and, when comparing its historical volatility, Definity Financial Corp is 5.41 times less risky than Sun Peak. The stock trades about -0.28 of its potential returns per unit of risk. The Sun Peak Metals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Sun Peak Metals on October 10, 2024 and sell it today you would lose (1.00) from holding Sun Peak Metals or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Sun Peak Metals
Performance |
| Timeline |
| Definity Financial Corp |
| Sun Peak Metals |
Definity Financial and Sun Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Sun Peak
The main advantage of trading using opposite Definity Financial and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Sun Peak 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 Peak will offset losses from the drop in Sun Peak's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Sun Peak vs. Millbank Mining Corp | Sun Peak vs. Hampton Financial Corp | Sun Peak vs. Fairfax Financial Holdings | Sun Peak vs. VersaBank |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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