Correlation Between Swiss Life and Sun Life
Can any of the company-specific risk be diversified away by investing in both Swiss Life and Sun Life 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 Swiss Life and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Life Holding and Sun Life Financial, you can compare the effects of market volatilities on Swiss Life and Sun Life 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 Swiss Life with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Sun Life.
Diversification Opportunities for Swiss Life and Sun Life
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Swiss and Sun is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Swiss 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 Swiss Life Holding are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Swiss Life i.e., Swiss Life and Sun Life go up and down completely randomly.
Pair Corralation between Swiss Life and Sun Life
Assuming the 90 days horizon Swiss Life Holding is expected to generate 1.57 times more return on investment than Sun Life. However, Swiss Life is 1.57 times more volatile than Sun Life Financial. It trades about 0.07 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.07 per unit of risk. If you would invest 2,314 in Swiss Life Holding on September 13, 2024 and sell it today you would earn a total of 1,599 from holding Swiss Life Holding or generate 69.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Life Holding vs. Sun Life Financial
Performance |
| Timeline |
| Swiss Life Holding |
| Sun Life Financial |
Swiss Life and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and Sun Life
The main advantage of trading using opposite Swiss Life and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Swiss Life vs. Zurich Insurance Group | Swiss Life vs. Allianz SE | Swiss Life vs. Swiss Life Holding | Swiss Life vs. Zurich Insurance Group |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
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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