Correlation Between Economic Investment and Sun Life
Can any of the company-specific risk be diversified away by investing in both Economic Investment 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 Economic Investment and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Sun Life Financial, you can compare the effects of market volatilities on Economic Investment 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 Economic Investment with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Sun Life.
Diversification Opportunities for Economic Investment and Sun Life
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Economic and Sun is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust 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 Economic Investment 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 Economic Investment Trust 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 Economic Investment i.e., Economic Investment and Sun Life go up and down completely randomly.
Pair Corralation between Economic Investment and Sun Life
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 0.52 times more return on investment than Sun Life. However, Economic Investment Trust is 1.91 times less risky than Sun Life. It trades about 0.17 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.05 per unit of risk. If you would invest 17,000 in Economic Investment Trust on September 4, 2024 and sell it today you would earn a total of 325.00 from holding Economic Investment Trust or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Sun Life Financial
Performance |
| Timeline |
| Economic Investment Trust |
| Sun Life Financial |
Economic Investment and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Sun Life
The main advantage of trading using opposite Economic Investment and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment 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.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| Sun Life vs. MAG Silver Corp | Sun Life vs. Millennium Silver Corp | Sun Life vs. Earth Alive Clean | Sun Life vs. Monument Mining Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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