Correlation Between Premiere Entertainment and Sun Life
Can any of the company-specific risk be diversified away by investing in both Premiere Entertainment 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 Premiere Entertainment and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premiere Entertainment and Sun Life Financial, you can compare the effects of market volatilities on Premiere Entertainment 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 Premiere Entertainment with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premiere Entertainment and Sun Life.
Diversification Opportunities for Premiere Entertainment and Sun Life
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Premiere and Sun is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment i.e., Premiere Entertainment and Sun Life go up and down completely randomly.
Pair Corralation between Premiere Entertainment and Sun Life
Assuming the 90 days trading horizon Premiere Entertainment is expected to generate 3.07 times less return on investment than Sun Life. But when comparing it to its historical volatility, Premiere Entertainment is 1.03 times less risky than Sun Life. It trades about 0.04 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 287,079 in Sun Life Financial on September 2, 2024 and sell it today you would earn a total of 72,921 from holding Sun Life Financial or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.69% |
| Values | Daily Returns |
Premiere Entertainment vs. Sun Life Financial
Performance |
| Timeline |
| Premiere Entertainment |
| Sun Life Financial |
Premiere Entertainment and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premiere Entertainment and Sun Life
The main advantage of trading using opposite Premiere Entertainment and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premiere Entertainment 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.The idea behind Premiere Entertainment and Sun Life Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sun Life vs. GT Capital Holdings | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp | Sun Life vs. LFM Properties Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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