Correlation Between SUN LIFE and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on SUN LIFE and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Thyssenkrupp.
Diversification Opportunities for SUN LIFE and Thyssenkrupp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SUN and Thyssenkrupp is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of SUN LIFE i.e., SUN LIFE and Thyssenkrupp go up and down completely randomly.
Pair Corralation between SUN LIFE and Thyssenkrupp
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 3.25 times less risky than Thyssenkrupp. The stock trades about -0.14 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 402.00 in thyssenkrupp AG on November 3, 2024 and sell it today you would earn a total of 80.00 from holding thyssenkrupp AG or generate 19.9% 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. thyssenkrupp AG
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| thyssenkrupp AG |
SUN LIFE and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and Thyssenkrupp
The main advantage of trading using opposite SUN LIFE and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| SUN LIFE vs. Arrow Electronics | SUN LIFE vs. LG Electronics | SUN LIFE vs. INVITATION HOMES DL | SUN LIFE vs. STMicroelectronics NV |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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