Correlation Between Assicurazioni Generali and Sun Life

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

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

Diversification Opportunities for Assicurazioni Generali and Sun Life

0.7

Correlation Coefficient

Assicurazioni Generali  Sun Life

Poor diversification

The 3 months correlation between Assicurazioni and Sun is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Assicurazioni Generali SpA 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 Assicurazioni Generali 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 Assicurazioni Generali SpA 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 Assicurazioni Generali i.e., Assicurazioni Generali and Sun Life go up and down completely randomly.

Pair Corralation between Assicurazioni Generali and Sun Life

Assuming the 90 days horizon Assicurazioni Generali SpA is expected to generate 1.09 times more return on investment than Sun Life. However, Assicurazioni Generali is 1.09 times more volatile than Sun Life Financial. It trades about 0.1 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.07 per unit of risk. If you would invest  1,531  in Assicurazioni Generali SpA on September 26, 2024 and sell it today you would earn a total of  1,160  from holding Assicurazioni Generali SpA or generate 75.77% return on investment over 90 days.

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

Assicurazioni Generali SpA  vs.  Sun Life Financial

Assicurazioni Generali

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Assicurazioni Generali is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sun Life Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Assicurazioni Generali and Sun Life

The main advantage of trading using opposite Assicurazioni Generali and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assicurazioni Generali 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 Assicurazioni Generali SpA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.