Correlation Between Sun Life and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Sun Life and Boston Beer 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 Boston Beer 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 Boston Beer, you can compare the effects of market volatilities on Sun Life and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Boston Beer.
Diversification Opportunities for Sun Life and Boston Beer
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Boston is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Sun Life i.e., Sun Life and Boston Beer go up and down completely randomly.
Pair Corralation between Sun Life and Boston Beer
Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.42 times more return on investment than Boston Beer. However, Sun Life Financial is 2.4 times less risky than Boston Beer. It trades about -0.11 of its potential returns per unit of risk. Boston Beer is currently generating about -0.4 per unit of risk. If you would invest 5,893 in Sun Life Financial on November 3, 2024 and sell it today you would lose (128.00) from holding Sun Life Financial or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Boston Beer
Performance |
| Timeline |
| Sun Life Financial |
| Boston Beer |
Sun Life and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Boston Beer
The main advantage of trading using opposite Sun Life and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer'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 |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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