Correlation Between Sun Life and Metro Retail
Can any of the company-specific risk be diversified away by investing in both Sun Life and Metro Retail 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 Metro Retail 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 Metro Retail Stores, you can compare the effects of market volatilities on Sun Life and Metro Retail 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 Metro Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Metro Retail.
Diversification Opportunities for Sun Life and Metro Retail
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sun and Metro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Metro Retail Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Retail Stores 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 Metro Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Retail Stores has no effect on the direction of Sun Life i.e., Sun Life and Metro Retail go up and down completely randomly.
Pair Corralation between Sun Life and Metro Retail
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.51 times more return on investment than Metro Retail. However, Sun Life is 1.51 times more volatile than Metro Retail Stores. It trades about 0.05 of its potential returns per unit of risk. Metro Retail Stores is currently generating about 0.0 per unit of risk. If you would invest 227,928 in Sun Life Financial on September 21, 2024 and sell it today you would earn a total of 112,072 from holding Sun Life Financial or generate 49.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.66% |
| Values | Daily Returns |
Sun Life Financial vs. Metro Retail Stores
Performance |
| Timeline |
| Sun Life Financial |
| Metro Retail Stores |
Sun Life and Metro Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Metro Retail
The main advantage of trading using opposite Sun Life and Metro Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Metro Retail 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 Metro Retail will offset losses from the drop in Metro Retail's long position.| Sun Life vs. National Reinsurance | Sun Life vs. First Abacus Financial | Sun Life vs. GT Capital Holdings | Sun Life vs. Allhome Corp |
| Metro Retail vs. First Abacus Financial | Metro Retail vs. Allhome Corp | Metro Retail vs. Altus Property Ventures | Metro Retail vs. Monde Nissin 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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