Correlation Between Sun Life and IA Financial
Can any of the company-specific risk be diversified away by investing in both Sun Life and IA Financial 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 IA Financial 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 iA Financial, you can compare the effects of market volatilities on Sun Life and IA Financial 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 IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and IA Financial.
Diversification Opportunities for Sun Life and IA Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sun and IAFNF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Sun Life i.e., Sun Life and IA Financial go up and down completely randomly.
Pair Corralation between Sun Life and IA Financial
Considering the 90-day investment horizon Sun Life is expected to generate 1.71 times less return on investment than IA Financial. But when comparing it to its historical volatility, Sun Life Financial is 2.01 times less risky than IA Financial. It trades about 0.23 of its potential returns per unit of risk. iA Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,599 in iA Financial on September 2, 2024 and sell it today you would earn a total of 1,731 from holding iA Financial or generate 22.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. iA Financial
Performance |
| Timeline |
| Sun Life Financial |
| iA Financial |
Sun Life and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and IA Financial
The main advantage of trading using opposite Sun Life and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, IA Financial 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 IA Financial will offset losses from the drop in IA Financial'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 |
| IA Financial vs. ageas SANV | IA Financial vs. Athene Holding | IA Financial vs. Sampo OYJ | IA Financial vs. Athene Holding |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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