Correlation Between SUN LIFE and AT S

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

Diversification Opportunities for SUN LIFE and AT S

-0.2

Correlation Coefficient

SUN LIFE  AT S

Good diversification

The 3 months correlation between SUN and AUS is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria 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 AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of SUN LIFE i.e., SUN LIFE and AT S go up and down completely randomly.

Pair Corralation between SUN LIFE and AT S

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the AT S. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.71 times less risky than AT S. The stock trades about -0.09 of its potential returns per unit of risk. The AT S Austria is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,120  in AT S Austria on December 19, 2024 and sell it today you would earn a total of  214.00  from holding AT S Austria or generate 19.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

SUN LIFE FINANCIAL  vs.  AT S Austria

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.

AT S Austria

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AT S Austria are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AT S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN LIFE and AT S

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

The idea behind SUN LIFE FINANCIAL and AT S Austria 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.