Correlation Between Sun Life and Cedar Realty
Can any of the company-specific risk be diversified away by investing in both Sun Life and Cedar Realty 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 Cedar Realty 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 Cedar Realty Trust, you can compare the effects of market volatilities on Sun Life and Cedar Realty 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 Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Cedar Realty.
Diversification Opportunities for Sun Life and Cedar Realty
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Cedar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust 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 Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Sun Life i.e., Sun Life and Cedar Realty go up and down completely randomly.
Pair Corralation between Sun Life and Cedar Realty
Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.42 times more return on investment than Cedar Realty. However, Sun Life Financial is 2.4 times less risky than Cedar Realty. It trades about 0.11 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.04 per unit of risk. If you would invest 5,144 in Sun Life Financial on September 3, 2024 and sell it today you would earn a total of 995.00 from holding Sun Life Financial or generate 19.34% 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. Cedar Realty Trust
Performance |
| Timeline |
| Sun Life Financial |
| Cedar Realty Trust |
Sun Life and Cedar Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Cedar Realty
The main advantage of trading using opposite Sun Life and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Cedar Realty 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 Cedar Realty will offset losses from the drop in Cedar Realty'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 |
| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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