Correlation Between Forstrong Global and Sun Life
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Sun Life Financial, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Sun Life.
Diversification Opportunities for Forstrong Global and Sun Life
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Forstrong and Sun is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income 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 Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and Sun Life go up and down completely randomly.
Pair Corralation between Forstrong Global and Sun Life
Assuming the 90 days trading horizon Forstrong Global is expected to generate 1.58 times less return on investment than Sun Life. But when comparing it to its historical volatility, Forstrong Global Income is 4.15 times less risky than Sun Life. It trades about 0.11 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,344 in Sun Life Financial on August 30, 2024 and sell it today you would earn a total of 275.00 from holding Sun Life Financial or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.4% |
| Values | Daily Returns |
Forstrong Global Income vs. Sun Life Financial
Performance |
| Timeline |
| Forstrong Global Income |
| Sun Life Financial |
Forstrong Global and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Sun Life
The main advantage of trading using opposite Forstrong Global and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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