Correlation Between Sun Life and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both Sun Life and Keg Royalties 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 Keg Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Non and The Keg Royalties, you can compare the effects of market volatilities on Sun Life and Keg Royalties 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 Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Keg Royalties.
Diversification Opportunities for Sun Life and Keg Royalties
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Keg is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Non and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Non are associated (or correlated) with Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Sun Life i.e., Sun Life and Keg Royalties go up and down completely randomly.
Pair Corralation between Sun Life and Keg Royalties
Assuming the 90 days trading horizon Sun Life Non is expected to generate 0.73 times more return on investment than Keg Royalties. However, Sun Life Non is 1.37 times less risky than Keg Royalties. It trades about 0.09 of its potential returns per unit of risk. The Keg Royalties is currently generating about -0.3 per unit of risk. If you would invest 1,625 in Sun Life Non on August 29, 2024 and sell it today you would earn a total of 16.00 from holding Sun Life Non or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Non vs. The Keg Royalties
Performance |
| Timeline |
| Sun Life Non |
| Keg Royalties |
Sun Life and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Keg Royalties
The main advantage of trading using opposite Sun Life and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| Sun Life vs. Forstrong Global Income | Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp | Sun Life vs. iShares Canadian HYBrid |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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