Correlation Between Zurich Insurance and Sun Life
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance 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 Zurich Insurance and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zurich Insurance Group and Sun Life Financial, you can compare the effects of market volatilities on Zurich Insurance 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 Zurich Insurance with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Sun Life.
Diversification Opportunities for Zurich Insurance and Sun Life
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Sun is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance i.e., Zurich Insurance and Sun Life go up and down completely randomly.
Pair Corralation between Zurich Insurance and Sun Life
Assuming the 90 days horizon Zurich Insurance is expected to generate 1.42 times less return on investment than Sun Life. But when comparing it to its historical volatility, Zurich Insurance Group is 1.03 times less risky than Sun Life. It trades about 0.17 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 5,428 in Sun Life Financial on September 2, 2024 and sell it today you would earn a total of 711.00 from holding Sun Life Financial or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Sun Life Financial
Performance |
| Timeline |
| Zurich Insurance |
| Sun Life Financial |
Zurich Insurance and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Sun Life
The main advantage of trading using opposite Zurich Insurance and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance 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.| Zurich Insurance vs. ageas SANV | Zurich Insurance vs. Athene Holding | Zurich Insurance vs. Sampo OYJ | Zurich Insurance vs. Athene Holding |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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