Correlation Between Sun Life and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Sun Life and National Reinsurance 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 National Reinsurance 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 National Reinsurance, you can compare the effects of market volatilities on Sun Life and National Reinsurance 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 National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and National Reinsurance.
Diversification Opportunities for Sun Life and National Reinsurance
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sun and National is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance 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 National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Sun Life i.e., Sun Life and National Reinsurance go up and down completely randomly.
Pair Corralation between Sun Life and National Reinsurance
Assuming the 90 days trading horizon Sun Life is expected to generate 1.91 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Sun Life Financial is 1.51 times less risky than National Reinsurance. It trades about 0.05 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 51.00 in National Reinsurance on August 28, 2024 and sell it today you would earn a total of 8.00 from holding National Reinsurance or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.8% |
| Values | Daily Returns |
Sun Life Financial vs. National Reinsurance
Performance |
| Timeline |
| Sun Life Financial |
| National Reinsurance |
Sun Life and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and National Reinsurance
The main advantage of trading using opposite Sun Life and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.| Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp | Sun Life vs. LFM Properties Corp | Sun Life vs. PXP Energy Corp |
| National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. LFM Properties Corp | National Reinsurance vs. PXP Energy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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