Correlation Between BB Seguridade and Sun Life

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

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

Diversification Opportunities for BB Seguridade and Sun Life

-0.65

Correlation Coefficient

BB Seguridade  Sun Life

Excellent diversification

The 3 months correlation between BBSEY and Sun is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes 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 BB Seguridade 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 BB Seguridade Participacoes 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 BB Seguridade i.e., BB Seguridade and Sun Life go up and down completely randomly.

Pair Corralation between BB Seguridade and Sun Life

Assuming the 90 days horizon BB Seguridade Participacoes is expected to under-perform the Sun Life. In addition to that, BB Seguridade is 1.79 times more volatile than Sun Life Financial. It trades about -0.14 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.22 per unit of volatility. If you would invest  5,428  in Sun Life Financial on August 31, 2024 and sell it today you would earn a total of  664.00  from holding Sun Life Financial or generate 12.23% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  Sun Life Financial

BB Seguridade Partic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sun Life Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 17 (%) 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 December 2024.

Pair Trading with BB Seguridade and Sun Life

The main advantage of trading using opposite BB Seguridade and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade 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 BB Seguridade Participacoes 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.