Correlation Between SUN LIFE and MAG SILVER

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

Diversification Opportunities for SUN LIFE and MAG SILVER

-0.03

Correlation Coefficient

SUN LIFE  MAG SILVER

Good diversification

The 3 months correlation between SUN and MAG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and MAG SILVER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG SILVER 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 MAG SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG SILVER has no effect on the direction of SUN LIFE i.e., SUN LIFE and MAG SILVER go up and down completely randomly.

Pair Corralation between SUN LIFE and MAG SILVER

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the MAG SILVER. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.1 times less risky than MAG SILVER. The stock trades about -0.13 of its potential returns per unit of risk. The MAG SILVER is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,397  in MAG SILVER on December 18, 2024 and sell it today you would earn a total of  88.00  from holding MAG SILVER or generate 6.3% return on investment over 90 days.

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

SUN LIFE FINANCIAL  vs.  MAG SILVER

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 fragile 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.

MAG SILVER

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MAG SILVER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MAG SILVER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SUN LIFE and MAG SILVER

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

The idea behind SUN LIFE FINANCIAL and MAG SILVER 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.