Correlation Between Therma Bright and Sun Life
Can any of the company-specific risk be diversified away by investing in both Therma Bright 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 Therma Bright and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Sun Life Financial, you can compare the effects of market volatilities on Therma Bright 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 Therma Bright with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Sun Life.
Diversification Opportunities for Therma Bright and Sun Life
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Therma and Sun is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright 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 Therma Bright 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 Therma Bright 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 Therma Bright i.e., Therma Bright and Sun Life go up and down completely randomly.
Pair Corralation between Therma Bright and Sun Life
Assuming the 90 days trading horizon Therma Bright is expected to generate 14.13 times more return on investment than Sun Life. However, Therma Bright is 14.13 times more volatile than Sun Life Financial. It trades about 0.12 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.04 per unit of risk. If you would invest 1.00 in Therma Bright on September 1, 2024 and sell it today you would earn a total of 1.75 from holding Therma Bright or generate 175.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Therma Bright vs. Sun Life Financial
Performance |
| Timeline |
| Therma Bright |
| Sun Life Financial |
Therma Bright and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and Sun Life
The main advantage of trading using opposite Therma Bright and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright 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.| Therma Bright vs. Solar Alliance Energy | Therma Bright vs. Braille Energy Systems | Therma Bright vs. MedMira | Therma Bright vs. Lite Access Technologies |
| Sun Life vs. Fairfax Financial Holdings | Sun Life vs. iShares Canadian HYBrid | Sun Life vs. Brompton European Dividend | Sun Life vs. Solar Alliance Energy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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