Correlation Between East Side and Sun Life
Can any of the company-specific risk be diversified away by investing in both East Side 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 East Side and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Side Games and Sun Life Non, you can compare the effects of market volatilities on East Side 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 East Side with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Sun Life.
Diversification Opportunities for East Side and Sun Life
Weak diversification
The 3 months correlation between East and Sun is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games 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 East Side 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 East Side Games 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 East Side i.e., East Side and Sun Life go up and down completely randomly.
Pair Corralation between East Side and Sun Life
Assuming the 90 days trading horizon East Side Games is expected to under-perform the Sun Life. In addition to that, East Side is 11.44 times more volatile than Sun Life Non. It trades about -0.22 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.17 per unit of volatility. If you would invest 1,610 in Sun Life Non on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Sun Life Non or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Side Games vs. Sun Life Non
Performance |
| Timeline |
| East Side Games |
| Sun Life Non |
East Side and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Side and Sun Life
The main advantage of trading using opposite East Side and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side 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.| East Side vs. Telus Corp | East Side vs. Toronto Dominion Bank | East Side vs. TC Energy Corp | East Side vs. Manulife Financial Corp |
| Sun Life vs. Reliq Health Technologies | Sun Life vs. A W FOOD | Sun Life vs. Guru Organic Energy | Sun Life vs. Andlauer Healthcare Gr |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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