Correlation Between Sun Life and Kering SA
Can any of the company-specific risk be diversified away by investing in both Sun Life and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on Sun Life and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Kering SA.
Diversification Opportunities for Sun Life and Kering SA
Very good diversification
The 3 months correlation between Sun and Kering is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Sun Life i.e., Sun Life and Kering SA go up and down completely randomly.
Pair Corralation between Sun Life and Kering SA
Assuming the 90 days horizon Sun Life is expected to generate 1.53 times less return on investment than Kering SA. But when comparing it to its historical volatility, Sun Life Financial is 1.92 times less risky than Kering SA. It trades about 0.1 of its potential returns per unit of risk. Kering SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,599 in Kering SA on October 25, 2024 and sell it today you would earn a total of 2,306 from holding Kering SA or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Kering SA
Performance |
| Timeline |
| Sun Life Financial |
| Kering SA |
Sun Life and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Kering SA
The main advantage of trading using opposite Sun Life and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Sun Life vs. MTY Food Group | Sun Life vs. Tyson Foods | Sun Life vs. Kingdee International Software | Sun Life vs. Ribbon Communications |
| Kering SA vs. Host Hotels Resorts | Kering SA vs. Wyndham Hotels Resorts | Kering SA vs. INTERCONT HOTELS | Kering SA vs. MPH Health Care |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |