Correlation Between Sun Lif and Pason Systems
Can any of the company-specific risk be diversified away by investing in both Sun Lif and Pason Systems 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 Pason Systems 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 Pason Systems, you can compare the effects of market volatilities on Sun Lif and Pason Systems 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 Pason Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Pason Systems.
Diversification Opportunities for Sun Lif and Pason Systems
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sun and Pason is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Pason Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pason Systems 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 Pason Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pason Systems has no effect on the direction of Sun Lif i.e., Sun Lif and Pason Systems go up and down completely randomly.
Pair Corralation between Sun Lif and Pason Systems
Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Pason Systems. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 2.09 times less risky than Pason Systems. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Pason Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,393 in Pason Systems on September 3, 2024 and sell it today you would earn a total of 24.00 from holding Pason Systems or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Lif Non vs. Pason Systems
Performance |
| Timeline |
| Sun Lif Non |
| Pason Systems |
Sun Lif and Pason Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Lif and Pason Systems
The main advantage of trading using opposite Sun Lif and Pason Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, Pason Systems 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 Pason Systems will offset losses from the drop in Pason Systems' long position.The idea behind Sun Lif Non and Pason Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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