Correlation Between SUN LIFE and Ameriprise Financial

Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on SUN LIFE and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Ameriprise Financial.

Diversification Opportunities for SUN LIFE and Ameriprise Financial

0.73

Correlation Coefficient

SUN LIFE  Ameriprise Financial

Poor diversification

The 3 months correlation between SUN and Ameriprise is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of SUN LIFE i.e., SUN LIFE and Ameriprise Financial go up and down completely randomly.

Pair Corralation between SUN LIFE and Ameriprise Financial

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.73 times more return on investment than Ameriprise Financial. However, SUN LIFE FINANCIAL is 1.38 times less risky than Ameriprise Financial. It trades about -0.09 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.12 per unit of risk. If you would invest  5,591  in SUN LIFE FINANCIAL on December 21, 2024 and sell it today you would lose (391.00) from holding SUN LIFE FINANCIAL or give up 6.99% 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.  Ameriprise Financial

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 unsteady 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.

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SUN LIFE and Ameriprise Financial

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

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