Correlation Between Sun Life and Invictus Energy
Can any of the company-specific risk be diversified away by investing in both Sun Life and Invictus Energy 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 Invictus Energy 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 Invictus Energy Limited, you can compare the effects of market volatilities on Sun Life and Invictus Energy 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 Invictus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Invictus Energy.
Diversification Opportunities for Sun Life and Invictus Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Invictus is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Sun Life i.e., Sun Life and Invictus Energy go up and down completely randomly.
Pair Corralation between Sun Life and Invictus Energy
Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Invictus Energy. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 9.73 times less risky than Invictus Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Invictus Energy Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.80 in Invictus Energy Limited on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Invictus Energy Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Invictus Energy Limited
Performance |
| Timeline |
| Sun Life Financial |
| Invictus Energy |
Sun Life and Invictus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Invictus Energy
The main advantage of trading using opposite Sun Life and Invictus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Invictus Energy 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 Invictus Energy will offset losses from the drop in Invictus Energy'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 |
| Invictus Energy vs. Sintana Energy | Invictus Energy vs. 88 Energy Limited | Invictus Energy vs. Journey Energy | Invictus Energy vs. Trillion Energy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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