Correlation Between Sun Life and FirstService Corp
Can any of the company-specific risk be diversified away by investing in both Sun Life and FirstService 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 FirstService 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 FirstService Corp, you can compare the effects of market volatilities on Sun Life and FirstService 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 FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and FirstService Corp.
Diversification Opportunities for Sun Life and FirstService Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and FirstService is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService 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 FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of Sun Life i.e., Sun Life and FirstService Corp go up and down completely randomly.
Pair Corralation between Sun Life and FirstService Corp
Assuming the 90 days trading horizon Sun Life is expected to generate 1.91 times less return on investment than FirstService Corp. But when comparing it to its historical volatility, Sun Life Financial is 1.44 times less risky than FirstService Corp. It trades about 0.07 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 21,213 in FirstService Corp on August 24, 2024 and sell it today you would earn a total of 5,592 from holding FirstService Corp or generate 26.36% 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. FirstService Corp
Performance |
| Timeline |
| Sun Life Financial |
| FirstService Corp |
Sun Life and FirstService Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and FirstService Corp
The main advantage of trading using opposite Sun Life and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, FirstService 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 FirstService Corp will offset losses from the drop in FirstService Corp'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 |
| FirstService Corp vs. Colliers International Group | FirstService Corp vs. Altus Group Limited | FirstService Corp vs. CCL Industries | FirstService Corp vs. Ritchie Bros Auctioneers |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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