Correlation Between Sun Life and Overactive Media
Can any of the company-specific risk be diversified away by investing in both Sun Life and Overactive Media 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 Overactive Media 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 Overactive Media Corp, you can compare the effects of market volatilities on Sun Life and Overactive Media 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 Overactive Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Overactive Media.
Diversification Opportunities for Sun Life and Overactive Media
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Overactive is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Non and Overactive Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overactive Media 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 Non are associated (or correlated) with Overactive Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overactive Media Corp has no effect on the direction of Sun Life i.e., Sun Life and Overactive Media go up and down completely randomly.
Pair Corralation between Sun Life and Overactive Media
Assuming the 90 days trading horizon Sun Life is expected to generate 6.18 times less return on investment than Overactive Media. But when comparing it to its historical volatility, Sun Life Non is 8.58 times less risky than Overactive Media. It trades about 0.06 of its potential returns per unit of risk. Overactive Media Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Overactive Media Corp on September 15, 2024 and sell it today you would earn a total of 3.00 from holding Overactive Media Corp or generate 12.0% 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 Non vs. Overactive Media Corp
Performance |
| Timeline |
| Sun Life Non |
| Overactive Media Corp |
Sun Life and Overactive Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Overactive Media
The main advantage of trading using opposite Sun Life and Overactive Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Overactive Media 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 Overactive Media will offset losses from the drop in Overactive Media's long position.| Sun Life vs. Sun Life Financial | Sun Life vs. Solar Alliance Energy | Sun Life vs. EcoSynthetix | Sun Life vs. Tarku Resources |
| Overactive Media vs. Rivalry Corp | Overactive Media vs. Enthusiast Gaming Holdings | Overactive Media vs. Flow Beverage Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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