Correlation Between SUN LIFE and Materialise

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

By analyzing existing cross correlation between SUN LIFE FINANCIAL and Materialise NV, you can compare the effects of market volatilities on SUN LIFE and Materialise 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 SUN LIFE with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Materialise.

Diversification Opportunities for SUN LIFE and Materialise

0.7

Correlation Coefficient

SUN LIFE  Materialise

Poor diversification

The 3 months correlation between SUN and Materialise is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and SUN LIFE 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 SUN LIFE FINANCIAL are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of SUN LIFE i.e., SUN LIFE and Materialise go up and down completely randomly.

Pair Corralation between SUN LIFE and Materialise

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.23 times more return on investment than Materialise. However, SUN LIFE FINANCIAL is 4.32 times less risky than Materialise. It trades about -0.1 of its potential returns per unit of risk. Materialise NV is currently generating about -0.08 per unit of risk. If you would invest  5,641  in SUN LIFE FINANCIAL on December 24, 2024 and sell it today you would lose (441.00) from holding SUN LIFE FINANCIAL or give up 7.82% of portfolio value over 90 days.

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

SUN LIFE FINANCIAL  vs.  Materialise NV

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. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SUN LIFE and Materialise

The main advantage of trading using opposite SUN LIFE and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.

The idea behind SUN LIFE FINANCIAL and Materialise NV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.