Correlation Between Sun Lif and IA Financial
Can any of the company-specific risk be diversified away by investing in both Sun Lif and IA Financial 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 Lif and IA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Lif Non and iA Financial, you can compare the effects of market volatilities on Sun Lif and IA Financial 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 Lif with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and IA Financial.
Diversification Opportunities for Sun Lif and IA Financial
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sun and IAG is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Sun Lif 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 Lif Non are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Sun Lif i.e., Sun Lif and IA Financial go up and down completely randomly.
Pair Corralation between Sun Lif and IA Financial
Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the IA Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 3.22 times less risky than IA Financial. The preferred stock trades about -0.09 of its potential returns per unit of risk. The iA Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 10,928 in iA Financial on August 26, 2024 and sell it today you would earn a total of 2,267 from holding iA Financial or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Lif Non vs. iA Financial
Performance |
| Timeline |
| Sun Lif Non |
| iA Financial |
Sun Lif and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Lif and IA Financial
The main advantage of trading using opposite Sun Lif and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, IA Financial 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 IA Financial will offset losses from the drop in IA Financial's long position.| Sun Lif vs. Sun Life Financial | Sun Lif vs. Sun Life Financial | Sun Lif vs. Sun Life Financial | Sun Lif vs. iA Financial |
| IA Financial vs. Great West Lifeco | IA Financial vs. Intact Financial | IA Financial vs. IGM Financial | IA Financial vs. Sun Life Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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