Correlation Between Sun Life and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Sun Life and TransAlta Corp 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 TransAlta Corp 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 TransAlta Corp, you can compare the effects of market volatilities on Sun Life and TransAlta Corp 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 TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and TransAlta Corp.
Diversification Opportunities for Sun Life and TransAlta Corp
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and TransAlta is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp 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 TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Sun Life i.e., Sun Life and TransAlta Corp go up and down completely randomly.
Pair Corralation between Sun Life and TransAlta Corp
Assuming the 90 days trading horizon Sun Life is expected to generate 1.31 times less return on investment than TransAlta Corp. But when comparing it to its historical volatility, Sun Life Financial is 2.07 times less risky than TransAlta Corp. It trades about 0.06 of its potential returns per unit of risk. TransAlta Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,263 in TransAlta Corp on September 3, 2024 and sell it today you would earn a total of 324.00 from holding TransAlta Corp or generate 25.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. TransAlta Corp
Performance |
| Timeline |
| Sun Life Financial |
| TransAlta Corp |
Sun Life and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and TransAlta Corp
The main advantage of trading using opposite Sun Life and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.| Sun Life vs. Sun Life Non | Sun Life vs. Sun Life Financial | Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp |
| TransAlta Corp vs. Emera Inc | TransAlta Corp vs. TC Energy Corp | TransAlta Corp vs. Imperial Oil | TransAlta Corp vs. Sun Life Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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