Correlation Between Old Dominion and Sun Life
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and Sun Life Financial, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Sun Life.
Diversification Opportunities for Old Dominion and Sun Life
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Sun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight 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 Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and Sun Life go up and down completely randomly.
Pair Corralation between Old Dominion and Sun Life
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 2.46 times more return on investment than Sun Life. However, Old Dominion is 2.46 times more volatile than Sun Life Financial. It trades about 0.22 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.29 per unit of risk. If you would invest 19,181 in Old Dominion Freight on August 25, 2024 and sell it today you would earn a total of 2,844 from holding Old Dominion Freight or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. Sun Life Financial
Performance |
| Timeline |
| Old Dominion Freight |
| Sun Life Financial |
Old Dominion and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Sun Life
The main advantage of trading using opposite Old Dominion and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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