Correlation Between Electra Battery and Sun Life
Can any of the company-specific risk be diversified away by investing in both Electra Battery 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 Electra Battery and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Battery Materials and Sun Life Financial, you can compare the effects of market volatilities on Electra Battery 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 Electra Battery with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Sun Life.
Diversification Opportunities for Electra Battery and Sun Life
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electra and Sun is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials 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 Electra Battery 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 Electra Battery Materials 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 Electra Battery i.e., Electra Battery and Sun Life go up and down completely randomly.
Pair Corralation between Electra Battery and Sun Life
Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Sun Life. In addition to that, Electra Battery is 3.97 times more volatile than Sun Life Financial. It trades about -0.27 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.05 per unit of volatility. If you would invest 2,014 in Sun Life Financial on September 15, 2024 and sell it today you would earn a total of 14.00 from holding Sun Life Financial or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Sun Life Financial
Performance |
| Timeline |
| Electra Battery Materials |
| Sun Life Financial |
Electra Battery and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Sun Life
The main advantage of trading using opposite Electra Battery and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery 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.| Electra Battery vs. Foraco International SA | Electra Battery vs. Geodrill Limited | Electra Battery vs. Major Drilling Group | Electra Battery vs. Bri Chem Corp |
| Sun Life vs. Everyday People Financial | Sun Life vs. Getty Copper | Sun Life vs. NextSource Materials | Sun Life vs. Electra Battery Materials |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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