Correlation Between International Business and SUN LIFE
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and SUN LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and SUN LIFE FINANCIAL, you can compare the effects of market volatilities on International Business 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 International Business with a short position of SUN LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and SUN LIFE.
Diversification Opportunities for International Business and SUN LIFE
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and SUN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and SUN LIFE go up and down completely randomly.
Pair Corralation between International Business and SUN LIFE
Considering the 90-day investment horizon International Business Machines is expected to generate 0.9 times more return on investment than SUN LIFE. However, International Business Machines is 1.11 times less risky than SUN LIFE. It trades about 0.09 of its potential returns per unit of risk. SUN LIFE FINANCIAL is currently generating about 0.06 per unit of risk. If you would invest 22,193 in International Business Machines on October 22, 2024 and sell it today you would earn a total of 286.00 from holding International Business Machines or generate 1.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 88.89% |
Values | Daily Returns |
International Business Machine vs. SUN LIFE FINANCIAL
Performance |
Timeline |
International Business |
SUN LIFE FINANCIAL |
International Business and SUN LIFE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Business and SUN LIFE
The main advantage of trading using opposite International Business and SUN LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. Fiserv Inc |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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