Correlation Between SUN LIFE and Deutsche Bank

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

Diversification Opportunities for SUN LIFE and Deutsche Bank

0.59

Correlation Coefficient

SUN LIFE  Deutsche Bank

Very weak diversification

The 3 months correlation between SUN and Deutsche is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of SUN LIFE i.e., SUN LIFE and Deutsche Bank go up and down completely randomly.

Pair Corralation between SUN LIFE and Deutsche Bank

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.13 times less risky than Deutsche Bank. The stock trades about -0.31 of its potential returns per unit of risk. The Deutsche Bank Aktiengesellschaft is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,693  in Deutsche Bank Aktiengesellschaft on October 10, 2024 and sell it today you would lose (7.00) from holding Deutsche Bank Aktiengesellschaft or give up 0.41% of portfolio value over 90 days.

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

SUN LIFE FINANCIAL  vs.  Deutsche Bank Aktiengesellscha

SUN LIFE FINANCIAL

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SUN LIFE FINANCIAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SUN LIFE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Deutsche Bank Aktien

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Deutsche Bank is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SUN LIFE and Deutsche Bank

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

The idea behind SUN LIFE FINANCIAL and Deutsche Bank Aktiengesellschaft 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.