Correlation Between Warner Music and Sun Life
Can any of the company-specific risk be diversified away by investing in both Warner Music 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 Warner Music and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Sun Life Financial, you can compare the effects of market volatilities on Warner Music 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 Warner Music with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Sun Life.
Diversification Opportunities for Warner Music and Sun Life
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Warner and Sun is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group 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 Warner Music 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 Warner Music Group 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 Warner Music i.e., Warner Music and Sun Life go up and down completely randomly.
Pair Corralation between Warner Music and Sun Life
Assuming the 90 days horizon Warner Music is expected to generate 19.23 times less return on investment than Sun Life. In addition to that, Warner Music is 1.74 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 0.07 per unit of volatility. If you would invest 3,932 in Sun Life Financial on October 16, 2024 and sell it today you would earn a total of 1,618 from holding Sun Life Financial or generate 41.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Sun Life Financial
Performance |
| Timeline |
| Warner Music Group |
| Sun Life Financial |
Warner Music and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Sun Life
The main advantage of trading using opposite Warner Music and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music 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.| Warner Music vs. COFCO Joycome Foods | Warner Music vs. FIREWEED METALS P | Warner Music vs. GREENX METALS LTD | Warner Music vs. MTY Food Group |
| Sun Life vs. QUEEN S ROAD | Sun Life vs. Nishi Nippon Railroad Co | Sun Life vs. COPLAND ROAD CAPITAL | Sun Life vs. Warner Music Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |