Correlation Between Apex Mining and Sun Life

Can any of the company-specific risk be diversified away by investing in both Apex Mining 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 Apex Mining and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apex Mining Co and Sun Life Financial, you can compare the effects of market volatilities on Apex Mining 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 Apex Mining with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Mining and Sun Life.

Diversification Opportunities for Apex Mining and Sun Life

-0.64

Correlation Coefficient

Apex Mining  Sun Life

Excellent diversification

The 3 months correlation between Apex and Sun is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co 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 Apex Mining 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 Apex Mining Co 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 Apex Mining i.e., Apex Mining and Sun Life go up and down completely randomly.

Pair Corralation between Apex Mining and Sun Life

Assuming the 90 days trading horizon Apex Mining Co is expected to under-perform the Sun Life. But the stock apears to be less risky and, when comparing its historical volatility, Apex Mining Co is 2.23 times less risky than Sun Life. The stock trades about -0.08 of its potential returns per unit of risk. The Sun Life Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  292,029  in Sun Life Financial on September 12, 2024 and sell it today you would earn a total of  65,971  from holding Sun Life Financial or generate 22.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.25%
Values	Daily Returns

Apex Mining Co  vs.  Sun Life Financial

Apex Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Mining Co 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.

Sun Life Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sun Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apex Mining and Sun Life

The main advantage of trading using opposite Apex Mining and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apex Mining 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 Apex Mining Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.