Correlation Between Sun Life and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Sun Life and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on Sun Life and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Maple Leaf.
Diversification Opportunities for Sun Life and Maple Leaf
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Maple is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Sun Life i.e., Sun Life and Maple Leaf go up and down completely randomly.
Pair Corralation between Sun Life and Maple Leaf
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.24 times more return on investment than Maple Leaf. However, Sun Life Financial is 4.11 times less risky than Maple Leaf. It trades about 0.26 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.03 per unit of risk. If you would invest 2,001 in Sun Life Financial on September 13, 2024 and sell it today you would earn a total of 64.00 from holding Sun Life Financial or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sun Life Financial vs. Maple Leaf Foods
Performance |
| Timeline |
| Sun Life Financial |
| Maple Leaf Foods |
Sun Life and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Maple Leaf
The main advantage of trading using opposite Sun Life and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| Sun Life vs. Ocumetics Technology Corp | Sun Life vs. Sparx Technology | Sun Life vs. Aya Gold Silver | Sun Life vs. Evertz Technologies Limited |
| Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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