Correlation Between Royal Bank and Sun Life
Can any of the company-specific risk be diversified away by investing in both Royal Bank 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 Royal Bank and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Sun Life Financial, you can compare the effects of market volatilities on Royal Bank 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 Royal Bank with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Sun Life.
Diversification Opportunities for Royal Bank and Sun Life
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Sun is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of 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 Royal Bank 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 Royal Bank of 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 Royal Bank i.e., Royal Bank and Sun Life go up and down completely randomly.
Pair Corralation between Royal Bank and Sun Life
Assuming the 90 days horizon Royal Bank is expected to generate 4.11 times less return on investment than Sun Life. But when comparing it to its historical volatility, Royal Bank of is 1.35 times less risky than Sun Life. It trades about 0.13 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 7,785 in Sun Life Financial on August 31, 2024 and sell it today you would earn a total of 777.00 from holding Sun Life Financial or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Sun Life Financial
Performance |
| Timeline |
| Royal Bank |
| Sun Life Financial |
Royal Bank and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Sun Life
The main advantage of trading using opposite Royal Bank and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank 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.| Royal Bank vs. Toronto Dominion Bank | Royal Bank vs. Bank of Nova | Royal Bank vs. Bank of Montreal | Royal Bank vs. Canadian Imperial Bank |
| Sun Life vs. iShares Canadian HYBrid | Sun Life vs. Brompton European Dividend | Sun Life vs. Solar Alliance Energy | Sun Life vs. PHN Multi Style All Cap |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |