Correlation Between Sun Life and TC Energy
Can any of the company-specific risk be diversified away by investing in both Sun Life and TC Energy 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 TC Energy 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 TC Energy Corp, you can compare the effects of market volatilities on Sun Life and TC Energy 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 TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and TC Energy.
Diversification Opportunities for Sun Life and TC Energy
Very weak diversification
The 3 months correlation between Sun and TRP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy 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 TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Sun Life i.e., Sun Life and TC Energy go up and down completely randomly.
Pair Corralation between Sun Life and TC Energy
Assuming the 90 days trading horizon Sun Life is expected to generate 1.39 times less return on investment than TC Energy. But when comparing it to its historical volatility, Sun Life Financial is 1.18 times less risky than TC Energy. It trades about 0.07 of its potential returns per unit of risk. TC Energy Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,256 in TC Energy Corp on November 29, 2024 and sell it today you would earn a total of 2,147 from holding TC Energy Corp or generate 50.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sun Life Financial vs. TC Energy Corp
Performance |
| Timeline |
| Sun Life Financial |
| TC Energy Corp |
Sun Life and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and TC Energy
The main advantage of trading using opposite Sun Life and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, TC Energy 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 TC Energy will offset losses from the drop in TC Energy's long position.| Sun Life vs. Manulife Financial Corp | Sun Life vs. Great West Lifeco | Sun Life vs. National Bank of | Sun Life vs. Canadian Imperial Bank |
| TC Energy vs. Enbridge | TC Energy vs. BCE Inc | TC Energy vs. Fortis Inc | TC Energy vs. Pembina Pipeline 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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