Correlation Between Laurentian Bank and Sun Lif
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Sun Lif 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 Laurentian Bank and Sun Lif into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and Sun Lif Non, you can compare the effects of market volatilities on Laurentian Bank and Sun Lif 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 Laurentian Bank with a short position of Sun Lif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Sun Lif.
Diversification Opportunities for Laurentian Bank and Sun Lif
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Laurentian and Sun is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Sun Lif go up and down completely randomly.
Pair Corralation between Laurentian Bank and Sun Lif
Assuming the 90 days horizon Laurentian Bank is expected to under-perform the Sun Lif. But the stock apears to be less risky and, when comparing its historical volatility, Laurentian Bank is 1.37 times less risky than Sun Lif. The stock trades about -0.11 of its potential returns per unit of risk. The Sun Lif Non is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,110 in Sun Lif Non on December 31, 2024 and sell it today you would lose (65.00) from holding Sun Lif Non or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Sun Lif Non
Performance |
| Timeline |
| Laurentian Bank |
| Sun Lif Non |
Laurentian Bank and Sun Lif Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Sun Lif
The main advantage of trading using opposite Laurentian Bank and Sun Lif positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Sun Lif 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 Lif will offset losses from the drop in Sun Lif's long position.| Laurentian Bank vs. National Bank of | ||
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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