Correlation Between AKITA Drilling and Sun Life
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling 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 AKITA Drilling and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Sun Life Financial, you can compare the effects of market volatilities on AKITA Drilling 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 AKITA Drilling with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Sun Life.
Diversification Opportunities for AKITA Drilling and Sun Life
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AKITA and Sun is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling i.e., AKITA Drilling and Sun Life go up and down completely randomly.
Pair Corralation between AKITA Drilling and Sun Life
Assuming the 90 days trading horizon AKITA Drilling is expected to under-perform the Sun Life. In addition to that, AKITA Drilling is 2.71 times more volatile than Sun Life Financial. It trades about -0.06 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.06 per unit of volatility. If you would invest 1,989 in Sun Life Financial on December 5, 2024 and sell it today you would earn a total of 51.00 from holding Sun Life Financial or generate 2.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AKITA Drilling vs. Sun Life Financial
Performance |
Timeline |
AKITA Drilling |
Sun Life Financial |
AKITA Drilling and Sun Life Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AKITA Drilling and Sun Life
The main advantage of trading using opposite AKITA Drilling and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling 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.AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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