Correlation Between Leons Furniture and Sun Life
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Sun Life 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 Leons Furniture and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and Sun Life Non, you can compare the effects of market volatilities on Leons Furniture and Sun Life 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 Leons Furniture with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Sun Life.
Diversification Opportunities for Leons Furniture and Sun Life
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leons and Sun is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non and Leons Furniture 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 Leons Furniture Limited are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Non has no effect on the direction of Leons Furniture i.e., Leons Furniture and Sun Life go up and down completely randomly.
Pair Corralation between Leons Furniture and Sun Life
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the Sun Life. In addition to that, Leons Furniture is 1.97 times more volatile than Sun Life Non. It trades about -0.04 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.3 per unit of volatility. If you would invest 1,590 in Sun Life Non on September 14, 2024 and sell it today you would earn a total of 56.00 from holding Sun Life Non or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Sun Life Non
Performance |
| Timeline |
| Leons Furniture |
| Sun Life Non |
Leons Furniture and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Sun Life
The main advantage of trading using opposite Leons Furniture and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. Toromont Industries | Leons Furniture vs. iShares Canadian HYBrid |
| Sun Life vs. Westshore Terminals Investment | Sun Life vs. Canaf Investments | Sun Life vs. Highwood Asset Management | Sun Life vs. Canso Credit Trust |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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