Correlation Between Intact Financial and Sun Life

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

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

Diversification Opportunities for Intact Financial and Sun Life

-0.32

Correlation Coefficient

Intact Financial  Sun Life

Very good diversification

The 3 months correlation between Intact and Sun is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp 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 Intact Financial 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 Intact Financial Corp 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 Intact Financial i.e., Intact Financial and Sun Life go up and down completely randomly.

Pair Corralation between Intact Financial and Sun Life

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.87 times more return on investment than Sun Life. However, Intact Financial Corp is 1.15 times less risky than Sun Life. It trades about 0.08 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.0 per unit of risk. If you would invest  2,385  in Intact Financial Corp on September 17, 2024 and sell it today you would earn a total of  74.00  from holding Intact Financial Corp or generate 3.1% return on investment over 90 days.

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

Intact Financial Corp  vs.  Sun Life Financial

Intact Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sun Life Financial

Risk-Adjusted Performance

0 of 100

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 somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intact Financial and Sun Life

The main advantage of trading using opposite Intact Financial and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial 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 Intact Financial Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..