Correlation Between Sun Life and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Sun Life and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Sun Life and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Emerson Radio.
Diversification Opportunities for Sun Life and Emerson Radio
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Emerson is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Sun Life i.e., Sun Life and Emerson Radio go up and down completely randomly.
Pair Corralation between Sun Life and Emerson Radio
Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.33 times more return on investment than Emerson Radio. However, Sun Life Financial is 3.04 times less risky than Emerson Radio. It trades about 0.09 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.02 per unit of risk. If you would invest 4,890 in Sun Life Financial on September 2, 2024 and sell it today you would earn a total of 1,249 from holding Sun Life Financial or generate 25.54% 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. Emerson Radio
Performance |
| Timeline |
| Sun Life Financial |
| Emerson Radio |
Sun Life and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Emerson Radio
The main advantage of trading using opposite Sun Life and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio'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 |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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