Correlation Between SUN LIFE and LG Electronics
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on SUN LIFE and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and LG Electronics.
Diversification Opportunities for SUN LIFE and LG Electronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SUN and LGLG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of SUN LIFE i.e., SUN LIFE and LG Electronics go up and down completely randomly.
Pair Corralation between SUN LIFE and LG Electronics
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.43 times more return on investment than LG Electronics. However, SUN LIFE FINANCIAL is 2.34 times less risky than LG Electronics. It trades about 0.14 of its potential returns per unit of risk. LG Electronics is currently generating about -0.05 per unit of risk. If you would invest 4,830 in SUN LIFE FINANCIAL on November 2, 2024 and sell it today you would earn a total of 770.00 from holding SUN LIFE FINANCIAL or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. LG Electronics
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| LG Electronics |
SUN LIFE and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and LG Electronics
The main advantage of trading using opposite SUN LIFE and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' 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 |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Samsung Electronics Co | LG Electronics vs. Sony Group Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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