Correlation Between New Residential and SUN LIFE

Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and SUN LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Residential Investment and SUN LIFE FINANCIAL, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of SUN LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and SUN LIFE.

Diversification Opportunities for New Residential and SUN LIFE

-0.34

Correlation Coefficient

New Residential  SUN LIFE

Very good diversification

The 3 months correlation between New and SUN is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment 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 New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and SUN LIFE go up and down completely randomly.

Pair Corralation between New Residential and SUN LIFE

Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.96 times more return on investment than SUN LIFE. However, New Residential Investment is 1.04 times less risky than SUN LIFE. It trades about 0.07 of its potential returns per unit of risk. SUN LIFE FINANCIAL is currently generating about -0.1 per unit of risk. If you would invest  1,023  in New Residential Investment on December 20, 2024 and sell it today you would earn a total of  51.00  from holding New Residential Investment or generate 4.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

New Residential Investment  vs.  SUN LIFE FINANCIAL

New Residential Inve

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, New Residential is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SUN LIFE FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUN LIFE FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with New Residential and SUN LIFE

The main advantage of trading using opposite New Residential and SUN LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.

The idea behind New Residential Investment and SUN LIFE FINANCIAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.