Correlation Between Sun Life and Lopez Holdings
Can any of the company-specific risk be diversified away by investing in both Sun Life and Lopez Holdings 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 Lopez Holdings 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 Lopez Holdings Corp, you can compare the effects of market volatilities on Sun Life and Lopez Holdings 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 Lopez Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Lopez Holdings.
Diversification Opportunities for Sun Life and Lopez Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sun and Lopez is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Lopez Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lopez Holdings 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 Lopez Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lopez Holdings Corp has no effect on the direction of Sun Life i.e., Sun Life and Lopez Holdings go up and down completely randomly.
Pair Corralation between Sun Life and Lopez Holdings
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.75 times more return on investment than Lopez Holdings. However, Sun Life Financial is 1.34 times less risky than Lopez Holdings. It trades about 0.01 of its potential returns per unit of risk. Lopez Holdings Corp is currently generating about -0.01 per unit of risk. If you would invest 300,000 in Sun Life Financial on January 17, 2025 and sell it today you would earn a total of 0.00 from holding Sun Life Financial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Sun Life Financial vs. Lopez Holdings Corp
Performance |
| Timeline |
| Sun Life Financial |
| Lopez Holdings Corp |
Sun Life and Lopez Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Lopez Holdings
The main advantage of trading using opposite Sun Life and Lopez Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Lopez Holdings 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 Lopez Holdings will offset losses from the drop in Lopez Holdings' long position.| Sun Life vs. COL Financial Group | Sun Life vs. Union Bank of | Sun Life vs. Apex Mining Co | Sun Life vs. Asia United Bank |
| Lopez Holdings vs. Metro Retail Stores | Lopez Holdings vs. Jollibee Foods Corp | Lopez Holdings vs. National Reinsurance | Lopez Holdings vs. Converge Information Communications |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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