Correlation Between SUN LIFE and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on SUN LIFE and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Spirent Communications.
Diversification Opportunities for SUN LIFE and Spirent Communications
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SUN and Spirent is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of SUN LIFE i.e., SUN LIFE and Spirent Communications go up and down completely randomly.
Pair Corralation between SUN LIFE and Spirent Communications
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Spirent Communications. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 4.11 times less risky than Spirent Communications. The stock trades about -0.09 of its potential returns per unit of risk. The Spirent Communications plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Spirent Communications plc on November 8, 2024 and sell it today you would earn a total of 0.00 from holding Spirent Communications plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. Spirent Communications plc
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| Spirent Communications |
SUN LIFE and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and Spirent Communications
The main advantage of trading using opposite SUN LIFE and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.The idea behind SUN LIFE FINANCIAL and Spirent Communications plc 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.| Spirent Communications vs. BioNTech SE | Spirent Communications vs. Siamgas And Petrochemicals | Spirent Communications vs. Agilent Technologies | Spirent Communications vs. Genscript Biotech |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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