Correlation Between Income Financial and Sun Peak

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Can any of the company-specific risk be diversified away by investing in both Income Financial and Sun Peak 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 Income Financial and Sun Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Financial Trust and Sun Peak Metals, you can compare the effects of market volatilities on Income Financial and Sun Peak 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 Income Financial with a short position of Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Financial and Sun Peak.

Diversification Opportunities for Income Financial and Sun Peak

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Income and Sun is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and Income 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 Income Financial Trust are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Income Financial i.e., Income Financial and Sun Peak go up and down completely randomly.

Pair Corralation between Income Financial and Sun Peak

Assuming the 90 days trading horizon Income Financial Trust is expected to generate 0.25 times more return on investment than Sun Peak. However, Income Financial Trust is 4.05 times less risky than Sun Peak. It trades about 0.12 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.14 per unit of risk. If you would invest  821.00  in Income Financial Trust on October 26, 2024 and sell it today you would earn a total of  70.00  from holding Income Financial Trust or generate 8.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Income Financial Trust  vs.  Sun Peak Metals

 Performance 
       Timeline  
Income Financial Trust 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Income Financial Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Income Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Sun Peak Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Income Financial and Sun Peak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Income Financial and Sun Peak

The main advantage of trading using opposite Income Financial and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Financial position performs unexpectedly, Sun Peak 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 Peak will offset losses from the drop in Sun Peak's long position.
The idea behind Income Financial Trust and Sun Peak Metals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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