Correlation Between Sun Life and USU Software
Can any of the company-specific risk be diversified away by investing in both Sun Life and USU Software 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 USU Software 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 USU Software AG, you can compare the effects of market volatilities on Sun Life and USU Software 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 USU Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and USU Software.
Diversification Opportunities for Sun Life and USU Software
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and USU is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of Sun Life i.e., Sun Life and USU Software go up and down completely randomly.
Pair Corralation between Sun Life and USU Software
Assuming the 90 days horizon Sun Life is expected to generate 17.89 times less return on investment than USU Software. But when comparing it to its historical volatility, Sun Life Financial is 1.24 times less risky than USU Software. It trades about 0.01 of its potential returns per unit of risk. USU Software AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,160 in USU Software AG on November 3, 2024 and sell it today you would earn a total of 70.00 from holding USU Software AG or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Sun Life Financial vs. USU Software AG
Performance |
| Timeline |
| Sun Life Financial |
| USU Software AG |
Sun Life and USU Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and USU Software
The main advantage of trading using opposite Sun Life and USU Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, USU Software 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 USU Software will offset losses from the drop in USU Software's long position.| Sun Life vs. Insurance Australia Group | Sun Life vs. United Rentals | Sun Life vs. QBE Insurance Group | Sun Life vs. Direct Line Insurance |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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