Correlation Between Keurig Dr and Sun Life

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

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

Diversification Opportunities for Keurig Dr and Sun Life

-0.61

Correlation Coefficient

Keurig Dr  Sun Life

Excellent diversification

The 3 months correlation between Keurig and Sun is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper 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 Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Sun Life go up and down completely randomly.

Pair Corralation between Keurig Dr and Sun Life

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Sun Life. In addition to that, Keurig Dr is 1.05 times more volatile than Sun Life Financial. It trades about 0.0 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.07 per unit of volatility. If you would invest  4,247  in Sun Life Financial on September 24, 2024 and sell it today you would earn a total of  1,645  from holding Sun Life Financial or generate 38.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Keurig Dr Pepper  vs.  Sun Life Financial

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sun Life Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Keurig Dr and Sun Life

The main advantage of trading using opposite Keurig Dr and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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 Keurig Dr Pepper 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.