Correlation Between Enstar Group and Sun Life
Can any of the company-specific risk be diversified away by investing in both Enstar Group 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 Enstar Group and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enstar Group Limited and Sun Life Financial, you can compare the effects of market volatilities on Enstar Group 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 Enstar Group with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enstar Group and Sun Life.
Diversification Opportunities for Enstar Group and Sun Life
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Enstar and Sun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Limited 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 Enstar Group 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 Enstar Group Limited 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 Enstar Group i.e., Enstar Group and Sun Life go up and down completely randomly.
Pair Corralation between Enstar Group and Sun Life
Given the investment horizon of 90 days Enstar Group Limited is expected to under-perform the Sun Life. But the stock apears to be less risky and, when comparing its historical volatility, Enstar Group Limited is 4.12 times less risky than Sun Life. The stock trades about -0.04 of its potential returns per unit of risk. The Sun Life Financial is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 5,675 in Sun Life Financial on August 24, 2024 and sell it today you would earn a total of 464.00 from holding Sun Life Financial or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enstar Group Limited vs. Sun Life Financial
Performance |
| Timeline |
| Enstar Group Limited |
| Sun Life Financial |
Enstar Group and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enstar Group and Sun Life
The main advantage of trading using opposite Enstar Group and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enstar Group 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.| Enstar Group vs. Global Indemnity PLC | Enstar Group vs. Erie Indemnity | Enstar Group vs. AMERISAFE | Enstar Group vs. Diamond Hill Investment |
| Sun Life vs. Hartford Financial Services | Sun Life vs. Enstar Group Limited | Sun Life vs. American International Group | Sun Life vs. Axa Equitable Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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