Correlation Between UPS CDR and Sun Life
Can any of the company-specific risk be diversified away by investing in both UPS CDR 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 UPS CDR and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPS CDR and Sun Life Financial, you can compare the effects of market volatilities on UPS CDR 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 UPS CDR with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and Sun Life.
Diversification Opportunities for UPS CDR and Sun Life
Very weak diversification
The 3 months correlation between UPS and Sun is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR 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 UPS CDR 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 UPS CDR 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 UPS CDR i.e., UPS CDR and Sun Life go up and down completely randomly.
Pair Corralation between UPS CDR and Sun Life
Assuming the 90 days trading horizon UPS CDR is expected to under-perform the Sun Life. In addition to that, UPS CDR is 1.74 times more volatile than Sun Life Financial. It trades about -0.18 of its total potential returns per unit of risk. Sun Life Financial is currently generating about -0.16 per unit of volatility. If you would invest 8,461 in Sun Life Financial on November 28, 2024 and sell it today you would lose (545.00) from holding Sun Life Financial or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPS CDR vs. Sun Life Financial
Performance |
| Timeline |
| UPS CDR |
| Sun Life Financial |
UPS CDR and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPS CDR and Sun Life
The main advantage of trading using opposite UPS CDR and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPS CDR 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.| UPS CDR vs. Dream Office Real | UPS CDR vs. Advent Wireless | UPS CDR vs. Contagious Gaming | UPS CDR vs. Rogers Communications |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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