Correlation Between Sun Life and Arrow Exploration
Can any of the company-specific risk be diversified away by investing in both Sun Life and Arrow Exploration 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 Arrow Exploration 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 Arrow Exploration Corp, you can compare the effects of market volatilities on Sun Life and Arrow Exploration 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 Arrow Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Arrow Exploration.
Diversification Opportunities for Sun Life and Arrow Exploration
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Arrow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Arrow Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Exploration 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 Arrow Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Exploration Corp has no effect on the direction of Sun Life i.e., Sun Life and Arrow Exploration go up and down completely randomly.
Pair Corralation between Sun Life and Arrow Exploration
Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Arrow Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 3.89 times less risky than Arrow Exploration. The stock trades about -0.14 of its potential returns per unit of risk. The Arrow Exploration Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Arrow Exploration Corp on November 4, 2024 and sell it today you would lose (1.00) from holding Arrow Exploration Corp or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Arrow Exploration Corp
Performance |
| Timeline |
| Sun Life Financial |
| Arrow Exploration Corp |
Sun Life and Arrow Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Arrow Exploration
The main advantage of trading using opposite Sun Life and Arrow Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Arrow Exploration 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 Arrow Exploration will offset losses from the drop in Arrow Exploration'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 |
| Arrow Exploration vs. Barrister Energy LLC | Arrow Exploration vs. Buru Energy Limited | Arrow Exploration vs. Altura Energy | Arrow Exploration vs. Daybreak Oil and |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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