Correlation Between Sun Life and National Retail
Can any of the company-specific risk be diversified away by investing in both Sun Life and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on Sun Life and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and National Retail.
Diversification Opportunities for Sun Life and National Retail
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and National is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Sun Life i.e., Sun Life and National Retail go up and down completely randomly.
Pair Corralation between Sun Life and National Retail
Assuming the 90 days horizon Sun Life Financial is expected to generate 0.5 times more return on investment than National Retail. However, Sun Life Financial is 1.99 times less risky than National Retail. It trades about -0.21 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.17 per unit of risk. If you would invest 5,700 in Sun Life Financial on October 17, 2024 and sell it today you would lose (150.00) from holding Sun Life Financial or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. National Retail Properties
Performance |
| Timeline |
| Sun Life Financial |
| National Retail Prop |
Sun Life and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and National Retail
The main advantage of trading using opposite Sun Life and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Sun Life vs. SALESFORCE INC CDR | Sun Life vs. Indutrade AB | Sun Life vs. FIREWEED METALS P | Sun Life vs. FAST RETAIL ADR |
| National Retail vs. Performance Food Group | National Retail vs. PNC Financial Services | National Retail vs. Direct Line Insurance | National Retail vs. Sun Life Financial |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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