Correlation Between Sun Life and KBS Real
Can any of the company-specific risk be diversified away by investing in both Sun Life and KBS Real 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 KBS Real 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 KBS Real Estate, you can compare the effects of market volatilities on Sun Life and KBS Real 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 KBS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and KBS Real.
Diversification Opportunities for Sun Life and KBS Real
Pay attention - limited upside
The 3 months correlation between Sun and KBS is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and KBS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBS Real Estate 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 KBS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBS Real Estate has no effect on the direction of Sun Life i.e., Sun Life and KBS Real go up and down completely randomly.
Pair Corralation between Sun Life and KBS Real
Considering the 90-day investment horizon Sun Life is expected to generate 1.88 times less return on investment than KBS Real. But when comparing it to its historical volatility, Sun Life Financial is 6.32 times less risky than KBS Real. It trades about 0.22 of its potential returns per unit of risk. KBS Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 75.00 in KBS Real Estate on September 13, 2024 and sell it today you would earn a total of 25.00 from holding KBS Real Estate or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Sun Life Financial vs. KBS Real Estate
Performance |
| Timeline |
| Sun Life Financial |
| KBS Real Estate |
Sun Life and KBS Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and KBS Real
The main advantage of trading using opposite Sun Life and KBS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, KBS Real 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 KBS Real will offset losses from the drop in KBS Real'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 |
| KBS Real vs. Highwoods Properties | KBS Real vs. Piedmont Office Realty | KBS Real vs. Douglas Emmett | KBS Real vs. Kilroy Realty Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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