Correlation Between SUN LIFE and DIVIDEND GROWTH
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and DIVIDEND GROWTH 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 SUN LIFE and DIVIDEND GROWTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUN LIFE FINANCIAL and DIVIDEND GROWTH SPLIT, you can compare the effects of market volatilities on SUN LIFE and DIVIDEND GROWTH 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 SUN LIFE with a short position of DIVIDEND GROWTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and DIVIDEND GROWTH.
Diversification Opportunities for SUN LIFE and DIVIDEND GROWTH
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SUN and DIVIDEND is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and DIVIDEND GROWTH SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIVIDEND GROWTH SPLIT and SUN LIFE 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 SUN LIFE FINANCIAL are associated (or correlated) with DIVIDEND GROWTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIVIDEND GROWTH SPLIT has no effect on the direction of SUN LIFE i.e., SUN LIFE and DIVIDEND GROWTH go up and down completely randomly.
Pair Corralation between SUN LIFE and DIVIDEND GROWTH
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.36 times more return on investment than DIVIDEND GROWTH. However, SUN LIFE FINANCIAL is 2.78 times less risky than DIVIDEND GROWTH. It trades about -0.1 of its potential returns per unit of risk. DIVIDEND GROWTH SPLIT is currently generating about -0.09 per unit of risk. If you would invest 5,700 in SUN LIFE FINANCIAL on November 2, 2024 and sell it today you would lose (100.00) from holding SUN LIFE FINANCIAL or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. DIVIDEND GROWTH SPLIT
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| DIVIDEND GROWTH SPLIT |
SUN LIFE and DIVIDEND GROWTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and DIVIDEND GROWTH
The main advantage of trading using opposite SUN LIFE and DIVIDEND GROWTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, DIVIDEND GROWTH 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 DIVIDEND GROWTH will offset losses from the drop in DIVIDEND GROWTH's long position.| SUN LIFE vs. US FOODS HOLDING | SUN LIFE vs. Hemisphere Energy Corp | SUN LIFE vs. Wayside Technology Group | SUN LIFE vs. Iridium Communications |
| DIVIDEND GROWTH vs. Apple Inc | DIVIDEND GROWTH vs. Apple Inc | DIVIDEND GROWTH vs. Apple Inc | DIVIDEND GROWTH vs. Apple Inc |
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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