Correlation Between SUN LIFE and Apple
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on SUN LIFE and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Apple.
Diversification Opportunities for SUN LIFE and Apple
Poor diversification
The 3 months correlation between SUN and Apple is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of SUN LIFE i.e., SUN LIFE and Apple go up and down completely randomly.
Pair Corralation between SUN LIFE and Apple
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.58 times more return on investment than Apple. However, SUN LIFE FINANCIAL is 1.72 times less risky than Apple. It trades about -0.05 of its potential returns per unit of risk. Apple Inc is currently generating about -0.52 per unit of risk. If you would invest 5,700 in SUN LIFE FINANCIAL on October 25, 2024 and sell it today you would lose (50.00) from holding SUN LIFE FINANCIAL or give up 0.88% 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. Apple Inc
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| Apple Inc |
SUN LIFE and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and Apple
The main advantage of trading using opposite SUN LIFE and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind SUN LIFE FINANCIAL and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Apple vs. ARROW ELECTRONICS | Apple vs. Methode Electronics | Apple vs. Safety Insurance Group | Apple vs. REVO INSURANCE SPA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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