Correlation Between Brompton European and Sun Life
Can any of the company-specific risk be diversified away by investing in both Brompton European 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 Brompton European and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton European Dividend and Sun Life Financial, you can compare the effects of market volatilities on Brompton European 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 Brompton European with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Sun Life.
Diversification Opportunities for Brompton European and Sun Life
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brompton and Sun is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend 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 Brompton European 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 Brompton European Dividend 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 Brompton European i.e., Brompton European and Sun Life go up and down completely randomly.
Pair Corralation between Brompton European and Sun Life
Assuming the 90 days trading horizon Brompton European is expected to generate 1.45 times less return on investment than Sun Life. In addition to that, Brompton European is 1.07 times more volatile than Sun Life Financial. It trades about 0.07 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.12 per unit of volatility. If you would invest 6,643 in Sun Life Financial on September 2, 2024 and sell it today you would earn a total of 1,974 from holding Sun Life Financial or generate 29.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Sun Life Financial
Performance |
| Timeline |
| Brompton European |
| Sun Life Financial |
Brompton European and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Sun Life
The main advantage of trading using opposite Brompton European and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European 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.| Brompton European vs. Brompton Global Dividend | Brompton European vs. Global Healthcare Income | Brompton European vs. Tech Leaders Income | Brompton European vs. Brompton North American |
| Sun Life vs. Manulife Financial Corp | Sun Life vs. Great West Lifeco | Sun Life vs. National Bank of | Sun Life vs. Canadian Imperial Bank |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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