Correlation Between IShares Canadian and Sun Life
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian HYBrid and Sun Life Financial, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Sun Life.
Diversification Opportunities for IShares Canadian and Sun Life
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid 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 IShares Canadian 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Sun Life go up and down completely randomly.
Pair Corralation between IShares Canadian and Sun Life
Assuming the 90 days trading horizon IShares Canadian is expected to generate 23.51 times less return on investment than Sun Life. But when comparing it to its historical volatility, iShares Canadian HYBrid is 3.62 times less risky than Sun Life. It trades about 0.04 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 7,769 in Sun Life Financial on August 31, 2024 and sell it today you would earn a total of 793.00 from holding Sun Life Financial or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Sun Life Financial
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Sun Life Financial |
IShares Canadian and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Sun Life
The main advantage of trading using opposite IShares Canadian and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
| Sun Life vs. iShares Canadian HYBrid | Sun Life vs. Brompton European Dividend | Sun Life vs. Solar Alliance Energy | Sun Life vs. PHN Multi Style All Cap |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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