Correlation Between IA Financial and Sun Life
Can any of the company-specific risk be diversified away by investing in both IA Financial 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 IA Financial and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Sun Life Financial, you can compare the effects of market volatilities on IA Financial 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 IA Financial with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Sun Life.
Diversification Opportunities for IA Financial and Sun Life
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IAFNF and Sun is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial 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 IA Financial 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 iA Financial 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 IA Financial i.e., IA Financial and Sun Life go up and down completely randomly.
Pair Corralation between IA Financial and Sun Life
Assuming the 90 days horizon iA Financial is expected to generate 2.01 times more return on investment than Sun Life. However, IA Financial is 2.01 times more volatile than Sun Life Financial. It trades about 0.2 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.23 per unit of risk. If you would invest 7,599 in iA Financial on September 2, 2024 and sell it today you would earn a total of 1,731 from holding iA Financial or generate 22.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Sun Life Financial
Performance |
| Timeline |
| iA Financial |
| Sun Life Financial |
IA Financial and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Sun Life
The main advantage of trading using opposite IA Financial and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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.| IA Financial vs. ageas SANV | IA Financial vs. Athene Holding | IA Financial vs. Sampo OYJ | IA Financial vs. Athene Holding |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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