Correlation Between SUN LIFE and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and ASPEN TECHINC 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 ASPEN TECHINC 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 ASPEN TECHINC DL, you can compare the effects of market volatilities on SUN LIFE and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and ASPEN TECHINC.
Diversification Opportunities for SUN LIFE and ASPEN TECHINC
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SUN and ASPEN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of SUN LIFE i.e., SUN LIFE and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between SUN LIFE and ASPEN TECHINC
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 1.62 times more return on investment than ASPEN TECHINC. However, SUN LIFE is 1.62 times more volatile than ASPEN TECHINC DL. It trades about 0.11 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.17 per unit of risk. If you would invest 5,600 in SUN LIFE FINANCIAL on October 20, 2024 and sell it today you would earn a total of 100.00 from holding SUN LIFE FINANCIAL or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. ASPEN TECHINC DL
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| ASPEN TECHINC DL |
SUN LIFE and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and ASPEN TECHINC
The main advantage of trading using opposite SUN LIFE and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.The idea behind SUN LIFE FINANCIAL and ASPEN TECHINC DL 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.| ASPEN TECHINC vs. AEON METALS LTD | ASPEN TECHINC vs. Automatic Data Processing | ASPEN TECHINC vs. Nippon Light Metal | ASPEN TECHINC vs. China Datang |
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.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |