Correlation Between Stepan and Sun Life
Can any of the company-specific risk be diversified away by investing in both Stepan 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 Stepan and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Sun Life Financial, you can compare the effects of market volatilities on Stepan 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 Stepan with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Sun Life.
Diversification Opportunities for Stepan and Sun Life
Very weak diversification
The 3 months correlation between Stepan and Sun is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company 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 Stepan 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 Stepan Company 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 Stepan i.e., Stepan and Sun Life go up and down completely randomly.
Pair Corralation between Stepan and Sun Life
Considering the 90-day investment horizon Stepan is expected to generate 1.67 times less return on investment than Sun Life. In addition to that, Stepan is 2.3 times more volatile than Sun Life Financial. It trades about 0.13 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.51 per unit of volatility. If you would invest 5,514 in Sun Life Financial on September 3, 2024 and sell it today you would earn a total of 625.00 from holding Sun Life Financial or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Sun Life Financial
Performance |
| Timeline |
| Stepan Company |
| Sun Life Financial |
Stepan and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Sun Life
The main advantage of trading using opposite Stepan and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan 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 Stepan Company 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. 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| CEOs Directory Screen CEOs from public companies around the world |