Correlation Between Sun Life and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Sun Life and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Sun Life and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Iridium Communications.
Diversification Opportunities for Sun Life and Iridium Communications
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sun and Iridium is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Sun Life i.e., Sun Life and Iridium Communications go up and down completely randomly.
Pair Corralation between Sun Life and Iridium Communications
Considering the 90-day investment horizon Sun Life is expected to generate 4.08 times less return on investment than Iridium Communications. But when comparing it to its historical volatility, Sun Life Financial is 3.02 times less risky than Iridium Communications. It trades about 0.09 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,886 in Iridium Communications on September 14, 2024 and sell it today you would earn a total of 157.00 from holding Iridium Communications or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Iridium Communications
Performance |
| Timeline |
| Sun Life Financial |
| Iridium Communications |
Sun Life and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Iridium Communications
The main advantage of trading using opposite Sun Life and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' 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 |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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