Correlation Between Sun Life and MAG Silver

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Can any of the company-specific risk be diversified away by investing in both Sun Life and MAG Silver 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 MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and MAG Silver Corp, you can compare the effects of market volatilities on Sun Life and MAG Silver 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 MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and MAG Silver.

Diversification Opportunities for Sun Life and MAG Silver

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sun and MAG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver 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 Financial are associated (or correlated) with MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Sun Life i.e., Sun Life and MAG Silver go up and down completely randomly.

Pair Corralation between Sun Life and MAG Silver

Assuming the 90 days trading horizon Sun Life is expected to generate 12.72 times less return on investment than MAG Silver. But when comparing it to its historical volatility, Sun Life Financial is 2.48 times less risky than MAG Silver. It trades about 0.03 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,118  in MAG Silver Corp on September 12, 2024 and sell it today you would earn a total of  132.00  from holding MAG Silver Corp or generate 6.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sun Life Financial  vs.  MAG Silver Corp

 Performance 
       Timeline  
Sun Life Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
MAG Silver Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Sun Life and MAG Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sun Life and MAG Silver

The main advantage of trading using opposite Sun Life and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.
The idea behind Sun Life Financial and MAG Silver Corp 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.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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