Correlation Between Highwood Asset and Sun Life
Can any of the company-specific risk be diversified away by investing in both Highwood Asset 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 Highwood Asset and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwood Asset Management and Sun Life Financial, you can compare the effects of market volatilities on Highwood Asset 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 Highwood Asset with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwood Asset and Sun Life.
Diversification Opportunities for Highwood Asset and Sun Life
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highwood and Sun is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management 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 Highwood Asset 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 Highwood Asset Management 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 Highwood Asset i.e., Highwood Asset and Sun Life go up and down completely randomly.
Pair Corralation between Highwood Asset and Sun Life
Assuming the 90 days horizon Highwood Asset Management is expected to under-perform the Sun Life. In addition to that, Highwood Asset is 3.35 times more volatile than Sun Life Financial. It trades about -0.02 of its total potential returns per unit of risk. Sun Life Financial is currently generating about -0.01 per unit of volatility. If you would invest 2,065 in Sun Life Financial on September 12, 2024 and sell it today you would lose (10.00) from holding Sun Life Financial or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Highwood Asset Management vs. Sun Life Financial
Performance |
| Timeline |
| Highwood Asset Management |
| Sun Life Financial |
Highwood Asset and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwood Asset and Sun Life
The main advantage of trading using opposite Highwood Asset and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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.| Highwood Asset vs. Brompton Lifeco Split | Highwood Asset vs. North American Financial | Highwood Asset vs. Prime Dividend Corp | Highwood Asset vs. Financial 15 Split |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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