Correlation Between Alliant Energy and Sun Life
Can any of the company-specific risk be diversified away by investing in both Alliant Energy 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 Alliant Energy and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Sun Life Financial, you can compare the effects of market volatilities on Alliant Energy 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 Alliant Energy with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Sun Life.
Diversification Opportunities for Alliant Energy and Sun Life
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Sun is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Alliant Energy 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 Alliant Energy Corp 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 Financial has no effect on the direction of Alliant Energy i.e., Alliant Energy and Sun Life go up and down completely randomly.
Pair Corralation between Alliant Energy and Sun Life
Considering the 90-day investment horizon Alliant Energy is expected to generate 1.47 times less return on investment than Sun Life. In addition to that, Alliant Energy is 1.14 times more volatile than Sun Life Financial. It trades about 0.04 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.07 per unit of volatility. If you would invest 4,317 in Sun Life Financial on August 26, 2024 and sell it today you would earn a total of 1,801 from holding Sun Life Financial or generate 41.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliant Energy Corp vs. Sun Life Financial
Performance |
| Timeline |
| Alliant Energy Corp |
| Sun Life Financial |
Alliant Energy and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Sun Life
The main advantage of trading using opposite Alliant Energy and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy 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.| Alliant Energy vs. Dominion Energy | Alliant Energy vs. Consolidated Edison | Alliant Energy vs. Eversource Energy | Alliant Energy vs. FirstEnergy |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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