Correlation Between Sun Life and Mechel OAO
Can any of the company-specific risk be diversified away by investing in both Sun Life and Mechel OAO 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 Mechel OAO 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 Mechel OAO, you can compare the effects of market volatilities on Sun Life and Mechel OAO 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 Mechel OAO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Mechel OAO.
Diversification Opportunities for Sun Life and Mechel OAO
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and Mechel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Mechel OAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechel OAO 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 Mechel OAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechel OAO has no effect on the direction of Sun Life i.e., Sun Life and Mechel OAO go up and down completely randomly.
Pair Corralation between Sun Life and Mechel OAO
If you would invest 4,902 in Sun Life Financial on September 14, 2024 and sell it today you would earn a total of 1,118 from holding Sun Life Financial or generate 22.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Sun Life Financial vs. Mechel OAO
Performance |
| Timeline |
| Sun Life Financial |
| Mechel OAO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sun Life and Mechel OAO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Mechel OAO
The main advantage of trading using opposite Sun Life and Mechel OAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Mechel OAO 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 Mechel OAO will offset losses from the drop in Mechel OAO'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 |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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