Correlation Between Sun Life and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Sun Life and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on Sun Life and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Canlan Ice.
Diversification Opportunities for Sun Life and Canlan Ice
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Canlan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Sun Life i.e., Sun Life and Canlan Ice go up and down completely randomly.
Pair Corralation between Sun Life and Canlan Ice
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.4 times more return on investment than Canlan Ice. However, Sun Life Financial is 2.49 times less risky than Canlan Ice. It trades about 0.06 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.02 per unit of risk. If you would invest 1,678 in Sun Life Financial on December 4, 2024 and sell it today you would earn a total of 397.00 from holding Sun Life Financial or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Canlan Ice Sports
Performance |
| Timeline |
| Sun Life Financial |
| Canlan Ice Sports |
Sun Life and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Canlan Ice
The main advantage of trading using opposite Sun Life and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| Sun Life vs. Nano One Materials | Sun Life vs. Brookfield Office Properties | Sun Life vs. Constellation Software | Sun Life vs. Rogers Communications |
| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
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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