Correlation Between TransAlta Corp and Sun Life
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp 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 TransAlta Corp and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and Sun Life Financial, you can compare the effects of market volatilities on TransAlta Corp 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 TransAlta Corp with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and Sun Life.
Diversification Opportunities for TransAlta Corp and Sun Life
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TransAlta and Sun is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp 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 TransAlta Corp 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 TransAlta Corp 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 TransAlta Corp i.e., TransAlta Corp and Sun Life go up and down completely randomly.
Pair Corralation between TransAlta Corp and Sun Life
Assuming the 90 days horizon TransAlta Corp is expected to generate 2.04 times more return on investment than Sun Life. However, TransAlta Corp is 2.04 times more volatile than Sun Life Financial. It trades about 0.06 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.09 per unit of risk. If you would invest 1,279 in TransAlta Corp on September 12, 2024 and sell it today you would earn a total of 578.00 from holding TransAlta Corp or generate 45.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta Corp vs. Sun Life Financial
Performance |
| Timeline |
| TransAlta Corp |
| Sun Life Financial |
TransAlta Corp and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and Sun Life
The main advantage of trading using opposite TransAlta Corp and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp 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.| TransAlta Corp vs. Emera Inc | TransAlta Corp vs. TC Energy Corp | TransAlta Corp vs. Imperial Oil | TransAlta Corp vs. Sun Life Financial |
| Sun Life vs. Manulife Financial Corp | Sun Life vs. Great West Lifeco | Sun Life vs. National Bank of | Sun Life vs. Canadian Imperial Bank |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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