Correlation Between Sun Life and Forstrong Global
Can any of the company-specific risk be diversified away by investing in both Sun Life and Forstrong Global 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 Sun Life and Forstrong Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Forstrong Global Income, you can compare the effects of market volatilities on Sun Life and Forstrong Global 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 Sun Life with a short position of Forstrong Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Forstrong Global.
Diversification Opportunities for Sun Life and Forstrong Global
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Forstrong is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Forstrong Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forstrong Global Income and Sun Life 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 Sun Life Financial are associated (or correlated) with Forstrong Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forstrong Global Income has no effect on the direction of Sun Life i.e., Sun Life and Forstrong Global go up and down completely randomly.
Pair Corralation between Sun Life and Forstrong Global
Assuming the 90 days trading horizon Sun Life Financial is expected to under-perform the Forstrong Global. In addition to that, Sun Life is 2.44 times more volatile than Forstrong Global Income. It trades about -0.06 of its total potential returns per unit of risk. Forstrong Global Income is currently generating about -0.08 per unit of volatility. If you would invest 2,175 in Forstrong Global Income on August 30, 2024 and sell it today you would lose (13.00) from holding Forstrong Global Income or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sun Life Financial vs. Forstrong Global Income
Performance |
| Timeline |
| Sun Life Financial |
| Forstrong Global Income |
Sun Life and Forstrong Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Forstrong Global
The main advantage of trading using opposite Sun Life and Forstrong Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Forstrong Global 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 Forstrong Global will offset losses from the drop in Forstrong Global's long position.| Sun Life vs. Sun Life Non | Sun Life vs. Sun Life Financial | Sun Life vs. Forstrong Global Income | Sun Life vs. BMO Aggregate Bond |
| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
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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