Correlation Between Western Asset and Sun Life
Can any of the company-specific risk be diversified away by investing in both Western 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 Western 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 Western Asset Investment and Sun Life Financial, you can compare the effects of market volatilities on Western 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 Western Asset with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sun Life.
Diversification Opportunities for Western Asset and Sun Life
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Sun is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment 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 Western 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Sun Life go up and down completely randomly.
Pair Corralation between Western Asset and Sun Life
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Sun Life. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 2.3 times less risky than Sun Life. The stock trades about -0.1 of its potential returns per unit of risk. The Sun Life Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,696 in Sun Life Financial on August 27, 2024 and sell it today you would earn a total of 422.00 from holding Sun Life Financial or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Sun Life Financial
Performance |
| Timeline |
| Western Asset Investment |
| Sun Life Financial |
Western Asset and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Sun Life
The main advantage of trading using opposite Western Asset and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western 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.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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