Correlation Between Sun Life and Chewy
Can any of the company-specific risk be diversified away by investing in both Sun Life and Chewy 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 Chewy 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 Chewy Inc, you can compare the effects of market volatilities on Sun Life and Chewy 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 Chewy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Chewy.
Diversification Opportunities for Sun Life and Chewy
Poor diversification
The 3 months correlation between Sun and Chewy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Sun Life i.e., Sun Life and Chewy go up and down completely randomly.
Pair Corralation between Sun Life and Chewy
Considering the 90-day investment horizon Sun Life is expected to generate 1.43 times less return on investment than Chewy. But when comparing it to its historical volatility, Sun Life Financial is 2.77 times less risky than Chewy. It trades about 0.51 of its potential returns per unit of risk. Chewy Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,884 in Chewy Inc on September 3, 2024 and sell it today you would earn a total of 457.00 from holding Chewy Inc or generate 15.85% 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. Chewy Inc
Performance |
| Timeline |
| Sun Life Financial |
| Chewy Inc |
Sun Life and Chewy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Chewy
The main advantage of trading using opposite Sun Life and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy'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 |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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