Correlation Between Top Frontier and Sun Life
Can any of the company-specific risk be diversified away by investing in both Top Frontier 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 Top Frontier and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Frontier Investment and Sun Life Financial, you can compare the effects of market volatilities on Top Frontier 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 Top Frontier with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and Sun Life.
Diversification Opportunities for Top Frontier and Sun Life
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Top and Sun is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment 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 Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and Sun Life go up and down completely randomly.
Pair Corralation between Top Frontier and Sun Life
Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the Sun Life. In addition to that, Top Frontier is 1.61 times more volatile than Sun Life Financial. It trades about 0.0 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.05 per unit of volatility. If you would invest 230,247 in Sun Life Financial on August 24, 2024 and sell it today you would earn a total of 109,753 from holding Sun Life Financial or generate 47.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.14% |
| Values | Daily Returns |
Top Frontier Investment vs. Sun Life Financial
Performance |
| Timeline |
| Top Frontier Investment |
| Sun Life Financial |
Top Frontier and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Frontier and Sun Life
The main advantage of trading using opposite Top Frontier and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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.| Top Frontier vs. Sun Life Financial | Top Frontier vs. Alliance Select Foods | Top Frontier vs. Metro Retail Stores | Top Frontier vs. BDO Unibank |
| Sun Life vs. Manulife Financial Corp | Sun Life vs. National Reinsurance | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp |
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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