Correlation Between Sun Life and Allied Corp
Can any of the company-specific risk be diversified away by investing in both Sun Life and Allied Corp 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 Allied Corp 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 Allied Corp, you can compare the effects of market volatilities on Sun Life and Allied Corp 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 Allied Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Allied Corp.
Diversification Opportunities for Sun Life and Allied Corp
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Allied is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Allied Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied 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 Allied Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Corp has no effect on the direction of Sun Life i.e., Sun Life and Allied Corp go up and down completely randomly.
Pair Corralation between Sun Life and Allied Corp
Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Allied Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 10.47 times less risky than Allied Corp. The stock trades about -0.17 of its potential returns per unit of risk. The Allied Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Allied Corp on November 3, 2024 and sell it today you would earn a total of 0.10 from holding Allied Corp or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Allied Corp
Performance |
| Timeline |
| Sun Life Financial |
| Allied Corp |
Sun Life and Allied Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Allied Corp
The main advantage of trading using opposite Sun Life and Allied Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Allied Corp 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 Allied Corp will offset losses from the drop in Allied Corp's long position.| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
| Allied Corp vs. The BC Bud | Allied Corp vs. Amexdrug | Allied Corp vs. Aion Therapeutic | Allied Corp vs. Pharmacielo |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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