Correlation Between Intact Financial and Sun Life
Can any of the company-specific risk be diversified away by investing in both Intact 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 Intact 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 Intact Financial and Sun Life Financial, you can compare the effects of market volatilities on Intact 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 Intact Financial with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Sun Life.
Diversification Opportunities for Intact Financial and Sun Life
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intact and Sun is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intact 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 Intact 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 Intact 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 Intact Financial i.e., Intact Financial and Sun Life go up and down completely randomly.
Pair Corralation between Intact Financial and Sun Life
Assuming the 90 days trading horizon Intact Financial is expected to under-perform the Sun Life. But the stock apears to be less risky and, when comparing its historical volatility, Intact Financial is 1.16 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 0.5 of returns per unit of risk over similar time horizon. If you would invest 7,688 in Sun Life Financial on September 2, 2024 and sell it today you would earn a total of 929.00 from holding Sun Life Financial or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial vs. Sun Life Financial
Performance |
| Timeline |
| Intact Financial |
| Sun Life Financial |
Intact Financial and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Sun Life
The main advantage of trading using opposite Intact Financial and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact 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.| Intact Financial vs. iA Financial | Intact Financial vs. Thomson Reuters Corp | Intact Financial vs. Metro Inc | Intact Financial vs. Waste Connections |
| Sun Life vs. Manulife Financial Corp | Sun Life vs. Great West Lifeco | Sun Life vs. National Bank of | Sun Life vs. Canadian Imperial Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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