Correlation Between Sun Life and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sun Life and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Sun Life and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Dow Jones.
Diversification Opportunities for Sun Life and Dow Jones
Excellent diversification
The 3 months correlation between Sun and Dow is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sun Life i.e., Sun Life and Dow Jones go up and down completely randomly.
Pair Corralation between Sun Life and Dow Jones
Assuming the 90 days trading horizon Sun Life Financial is expected to under-perform the Dow Jones. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.42 times less risky than Dow Jones. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% 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. Dow Jones Industrial
Performance |
| Timeline |
Sun Life and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sun Life Financial
Pair trading matchups for Sun Life
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sun Life and Dow Jones
The main advantage of trading using opposite Sun Life and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sun Life vs. Sun Life Financial | Sun Life vs. Forstrong Global Income | Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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