Correlation Between Sun Life and GT Capital
Can any of the company-specific risk be diversified away by investing in both Sun Life and GT Capital 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 GT Capital 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 GT Capital Holdings, you can compare the effects of market volatilities on Sun Life and GT Capital 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 GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and GT Capital.
Diversification Opportunities for Sun Life and GT Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and GTCAP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings 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 GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Sun Life i.e., Sun Life and GT Capital go up and down completely randomly.
Pair Corralation between Sun Life and GT Capital
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.48 times more return on investment than GT Capital. However, Sun Life is 1.48 times more volatile than GT Capital Holdings. It trades about 0.05 of its potential returns per unit of risk. GT Capital Holdings is currently generating about 0.06 per unit of risk. If you would invest 233,398 in Sun Life Financial on September 12, 2024 and sell it today you would earn a total of 124,602 from holding Sun Life Financial or generate 53.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.04% |
| Values | Daily Returns |
Sun Life Financial vs. GT Capital Holdings
Performance |
| Timeline |
| Sun Life Financial |
| GT Capital Holdings |
Sun Life and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and GT Capital
The main advantage of trading using opposite Sun Life and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital's long position.| Sun Life vs. Manulife Financial Corp | Sun Life vs. National Reinsurance | Sun Life vs. GT Capital Holdings | Sun Life vs. Allhome Corp |
| GT Capital vs. Philex Mining Corp | GT Capital vs. Robinsons Retail Holdings | GT Capital vs. Apex Mining Co | GT Capital vs. Century Pacific Food |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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