Correlation Between SUN LIFE and CARSALES
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on SUN LIFE and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and CARSALES.
Diversification Opportunities for SUN LIFE and CARSALES
Weak diversification
The 3 months correlation between SUN and CARSALES is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of SUN LIFE i.e., SUN LIFE and CARSALES go up and down completely randomly.
Pair Corralation between SUN LIFE and CARSALES
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the CARSALES. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.0 times less risky than CARSALES. The stock trades about -0.14 of its potential returns per unit of risk. The CARSALESCOM is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,200 in CARSALESCOM on November 4, 2024 and sell it today you would earn a total of 240.00 from holding CARSALESCOM or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. CARSALESCOM
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| CARSALESCOM |
SUN LIFE and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and CARSALES
The main advantage of trading using opposite SUN LIFE and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| SUN LIFE vs. Arrow Electronics | SUN LIFE vs. LG Electronics | SUN LIFE vs. INVITATION HOMES DL | SUN LIFE vs. STMicroelectronics NV |
| CARSALES vs. Fast Retailing Co | CARSALES vs. FAST RETAIL ADR | CARSALES vs. SIDETRADE EO 1 | CARSALES vs. TRADEDOUBLER AB SK |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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