Correlation Between SUN LIFE and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on SUN LIFE and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Yokohama Rubber.
Diversification Opportunities for SUN LIFE and Yokohama Rubber
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SUN and Yokohama is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of SUN LIFE i.e., SUN LIFE and Yokohama Rubber go up and down completely randomly.
Pair Corralation between SUN LIFE and Yokohama Rubber
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Yokohama Rubber. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 1.6 times less risky than Yokohama Rubber. The stock trades about -0.19 of its potential returns per unit of risk. The The Yokohama Rubber is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,060 in The Yokohama Rubber on November 7, 2024 and sell it today you would earn a total of 80.00 from holding The Yokohama Rubber or generate 3.88% 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. The Yokohama Rubber
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| Yokohama Rubber |
SUN LIFE and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and Yokohama Rubber
The main advantage of trading using opposite SUN LIFE and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| SUN LIFE vs. Transport International Holdings | SUN LIFE vs. CHIBA BANK | SUN LIFE vs. GREENX METALS LTD | SUN LIFE vs. OAKTRSPECLENDNEW |
| Yokohama Rubber vs. BRIT AMER TOBACCO | Yokohama Rubber vs. Discover Financial Services | Yokohama Rubber vs. Direct Line Insurance | Yokohama Rubber vs. JAPAN TOBACCO UNSPADR12 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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