Correlation Between Electrovaya Common and Sun Life

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

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

Diversification Opportunities for Electrovaya Common and Sun Life

0.58

Correlation Coefficient

Electrovaya Common  Sun Life

Very weak diversification

The 3 months correlation between Electrovaya and Sun is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares 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 Electrovaya Common 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 Electrovaya Common Shares 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 Electrovaya Common i.e., Electrovaya Common and Sun Life go up and down completely randomly.

Pair Corralation between Electrovaya Common and Sun Life

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 2.7 times more return on investment than Sun Life. However, Electrovaya Common is 2.7 times more volatile than Sun Life Financial. It trades about 0.02 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  246.00  in Electrovaya Common Shares on December 11, 2024 and sell it today you would lose (1.00) from holding Electrovaya Common Shares or give up 0.41% of portfolio value over 90 days.

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

Electrovaya Common Shares  vs.  Sun Life Financial

Electrovaya Common Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Sun Life Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Electrovaya Common and Sun Life

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

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.