Correlation Between Sun Life and Western Union
Can any of the company-specific risk be diversified away by investing in both Sun Life and Western Union 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 Western Union 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 Western Union Co, you can compare the effects of market volatilities on Sun Life and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Western Union.
Diversification Opportunities for Sun Life and Western Union
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and Western is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Sun Life i.e., Sun Life and Western Union go up and down completely randomly.
Pair Corralation between Sun Life and Western Union
Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.94 times more return on investment than Western Union. However, Sun Life Financial is 1.06 times less risky than Western Union. It trades about 0.32 of its potential returns per unit of risk. Western Union Co is currently generating about -0.02 per unit of risk. If you would invest 5,696 in Sun Life Financial on August 28, 2024 and sell it today you would earn a total of 462.00 from holding Sun Life Financial or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Western Union Co
Performance |
| Timeline |
| Sun Life Financial |
| Western Union |
Sun Life and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Western Union
The main advantage of trading using opposite Sun Life and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.| Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
| Western Union vs. American Express | Western Union vs. Morningstar Unconstrained Allocation | Western Union vs. Sitka Gold Corp | Western Union vs. MSCI ACWI exAUCONSUMER |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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