Correlation Between Sun Life and Hermès International
Can any of the company-specific risk be diversified away by investing in both Sun Life and Hermès International 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 Hermès International 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 Herms International Socit, you can compare the effects of market volatilities on Sun Life and Hermès International 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 Hermès International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Hermès International.
Diversification Opportunities for Sun Life and Hermès International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sun and Hermès is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 Hermès International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of Sun Life i.e., Sun Life and Hermès International go up and down completely randomly.
Pair Corralation between Sun Life and Hermès International
Assuming the 90 days horizon Sun Life Financial is expected to under-perform the Hermès International. In addition to that, Sun Life is 1.11 times more volatile than Herms International Socit. It trades about -0.09 of its total potential returns per unit of risk. Herms International Socit is currently generating about 0.56 per unit of volatility. If you would invest 234,400 in Herms International Socit on November 7, 2024 and sell it today you would earn a total of 36,700 from holding Herms International Socit or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sun Life Financial vs. Herms International Socit
Performance |
| Timeline |
| Sun Life Financial |
| Herms International Socit |
Sun Life and Hermès International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Hermès International
The main advantage of trading using opposite Sun Life and Hermès International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Hermès International 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 Hermès International will offset losses from the drop in Hermès International's long position.| Sun Life vs. Flutter Entertainment PLC | Sun Life vs. Tyson Foods | Sun Life vs. CAL MAINE FOODS | Sun Life vs. MOLSON RS BEVERAGE |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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