Correlation Between Sun Lif and Sun Life
Can any of the company-specific risk be diversified away by investing in both Sun Lif and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on Sun Lif and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Sun Life.
Diversification Opportunities for Sun Lif and Sun Life
Poor diversification
The 3 months correlation between Sun and Sun is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Sun Lif i.e., Sun Lif and Sun Life go up and down completely randomly.
Pair Corralation between Sun Lif and Sun Life
Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Sun Life. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 1.07 times less risky than Sun Life. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Sun Life Financial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,652 in Sun Life Financial on August 26, 2024 and sell it today you would lose (13.00) from holding Sun Life Financial or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Lif Non vs. Sun Life Financial
Performance |
| Timeline |
| Sun Lif Non |
| Sun Life Financial |
Sun Lif and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Lif and Sun Life
The main advantage of trading using opposite Sun Lif and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life'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 |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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