Correlation Between Axalta Coating and Sun Life

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

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

Diversification Opportunities for Axalta Coating and Sun Life

0.83

Correlation Coefficient

Axalta Coating  Sun Life

Very poor diversification

The 3 months correlation between Axalta and Sun is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems 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 Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and Sun Life go up and down completely randomly.

Pair Corralation between Axalta Coating and Sun Life

Given the investment horizon of 90 days Axalta Coating is expected to generate 1.32 times less return on investment than Sun Life. In addition to that, Axalta Coating is 2.01 times more volatile than Sun Life Financial. It trades about 0.05 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.14 per unit of volatility. If you would invest  5,585  in Sun Life Financial on September 18, 2024 and sell it today you would earn a total of  420.00  from holding Sun Life Financial or generate 7.52% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Sun Life Financial

Axalta Coating Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Sun Life Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Axalta Coating and Sun Life

The main advantage of trading using opposite Axalta Coating and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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 Axalta Coating Systems 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.