Correlation Between SUN LIFE and Fair Isaac
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Fair Isaac 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 Fair Isaac 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 Fair Isaac Corp, you can compare the effects of market volatilities on SUN LIFE and Fair Isaac 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 Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Fair Isaac.
Diversification Opportunities for SUN LIFE and Fair Isaac
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SUN and Fair is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of SUN LIFE i.e., SUN LIFE and Fair Isaac go up and down completely randomly.
Pair Corralation between SUN LIFE and Fair Isaac
Assuming the 90 days trading horizon SUN LIFE is expected to generate 13.4 times less return on investment than Fair Isaac. But when comparing it to its historical volatility, SUN LIFE FINANCIAL is 13.81 times less risky than Fair Isaac. It trades about 0.05 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 60,000 in Fair Isaac Corp on October 19, 2024 and sell it today you would earn a total of 123,150 from holding Fair Isaac Corp or generate 205.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. Fair Isaac Corp
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| Fair Isaac Corp |
SUN LIFE and Fair Isaac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and Fair Isaac
The main advantage of trading using opposite SUN LIFE and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Fair Isaac 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 Fair Isaac will offset losses from the drop in Fair Isaac's long position.The idea behind SUN LIFE FINANCIAL and Fair Isaac Corp 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.| Fair Isaac vs. Brockhaus Capital Management | Fair Isaac vs. Cleanaway Waste Management | Fair Isaac vs. Citic Telecom International | Fair Isaac vs. Sims Metal Management |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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