Correlation Between Sun Life and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Sun Life and Bowhead Specialty 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 Bowhead Specialty 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 Bowhead Specialty Holdings, you can compare the effects of market volatilities on Sun Life and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Bowhead Specialty.
Diversification Opportunities for Sun Life and Bowhead Specialty
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Bowhead is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Sun Life i.e., Sun Life and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Sun Life and Bowhead Specialty
Considering the 90-day investment horizon Sun Life is expected to generate 1.46 times less return on investment than Bowhead Specialty. But when comparing it to its historical volatility, Sun Life Financial is 2.24 times less risky than Bowhead Specialty. It trades about 0.18 of its potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,664 in Bowhead Specialty Holdings on August 30, 2024 and sell it today you would earn a total of 952.00 from holding Bowhead Specialty Holdings or generate 35.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Sun Life Financial |
| Bowhead Specialty |
Sun Life and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Bowhead Specialty
The main advantage of trading using opposite Sun Life and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty'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 |
| Bowhead Specialty vs. Axa Equitable Holdings | Bowhead Specialty vs. American International Group | Bowhead Specialty vs. Arch Capital Group | Bowhead Specialty vs. Sun Life Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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