Correlation Between Sun Life and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both Sun Life and Travelers Companies 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 Travelers Companies 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 The Travelers Companies, you can compare the effects of market volatilities on Sun Life and Travelers Companies 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 Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Travelers Companies.
Diversification Opportunities for Sun Life and Travelers Companies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Travelers is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies 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 Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Sun Life i.e., Sun Life and Travelers Companies go up and down completely randomly.
Pair Corralation between Sun Life and Travelers Companies
Considering the 90-day investment horizon Sun Life is expected to generate 1.68 times less return on investment than Travelers Companies. But when comparing it to its historical volatility, Sun Life Financial is 1.29 times less risky than Travelers Companies. It trades about 0.07 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,036 in The Travelers Companies on September 2, 2024 and sell it today you would earn a total of 9,568 from holding The Travelers Companies or generate 56.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. The Travelers Companies
Performance |
| Timeline |
| Sun Life Financial |
| The Travelers Companies |
Sun Life and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Travelers Companies
The main advantage of trading using opposite Sun Life and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' 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 |
| Travelers Companies vs. Selective Insurance Group | Travelers Companies vs. Aquagold International | Travelers Companies vs. Thrivent High Yield | Travelers Companies vs. Morningstar Unconstrained Allocation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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