Correlation Between Sun Lif and PrairieSky Royalty
Can any of the company-specific risk be diversified away by investing in both Sun Lif and PrairieSky Royalty 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 PrairieSky Royalty 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 PrairieSky Royalty, you can compare the effects of market volatilities on Sun Lif and PrairieSky Royalty 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 PrairieSky Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and PrairieSky Royalty.
Diversification Opportunities for Sun Lif and PrairieSky Royalty
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sun and PrairieSky is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and PrairieSky Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrairieSky Royalty 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 PrairieSky Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrairieSky Royalty has no effect on the direction of Sun Lif i.e., Sun Lif and PrairieSky Royalty go up and down completely randomly.
Pair Corralation between Sun Lif and PrairieSky Royalty
Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the PrairieSky Royalty. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 1.15 times less risky than PrairieSky Royalty. The preferred stock trades about -0.01 of its potential returns per unit of risk. The PrairieSky Royalty is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,530 in PrairieSky Royalty on September 3, 2024 and sell it today you would earn a total of 443.00 from holding PrairieSky Royalty or generate 17.51% 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. PrairieSky Royalty
Performance |
| Timeline |
| Sun Lif Non |
| PrairieSky Royalty |
Sun Lif and PrairieSky Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Lif and PrairieSky Royalty
The main advantage of trading using opposite Sun Lif and PrairieSky Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, PrairieSky Royalty 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 PrairieSky Royalty will offset losses from the drop in PrairieSky Royalty's long position.The idea behind Sun Lif Non and PrairieSky Royalty 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.| PrairieSky Royalty vs. Pason Systems | PrairieSky Royalty vs. Quarterhill | PrairieSky Royalty vs. Westaim 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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