Correlation Between Sun Life and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both Sun Life and Hartford Financial 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 Hartford Financial 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 Hartford Financial, you can compare the effects of market volatilities on Sun Life and Hartford Financial 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 Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Hartford Financial.
Diversification Opportunities for Sun Life and Hartford Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sun and Hartford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Sun Life i.e., Sun Life and Hartford Financial go up and down completely randomly.
Pair Corralation between Sun Life and Hartford Financial
Assuming the 90 days horizon Sun Life Financial is expected to generate 0.88 times more return on investment than Hartford Financial. However, Sun Life Financial is 1.13 times less risky than Hartford Financial. It trades about 0.47 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.36 per unit of risk. If you would invest 4,977 in Sun Life Financial on September 1, 2024 and sell it today you would earn a total of 823.00 from holding Sun Life Financial or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sun Life Financial vs. The Hartford Financial
Performance |
| Timeline |
| Sun Life Financial |
| The Hartford Financial |
Sun Life and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Hartford Financial
The main advantage of trading using opposite Sun Life and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Hartford Financial 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 Hartford Financial will offset losses from the drop in Hartford Financial's long position.| Sun Life vs. Sunstone Hotel Investors | Sun Life vs. China Resources Beer | Sun Life vs. Suntory Beverage Food | Sun Life vs. BOSTON BEER A |
| Hartford Financial vs. SCIENCE IN SPORT | Hartford Financial vs. Cleanaway Waste Management | Hartford Financial vs. TITANIUM TRANSPORTGROUP | Hartford Financial vs. International Consolidated Airlines |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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