Correlation Between Sun Life and Controladora Vuela

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

Diversification Opportunities for Sun Life and Controladora Vuela

0.84

Correlation Coefficient

Sun Life  Controladora Vuela

Very poor diversification

The 3 months correlation between Sun and Controladora is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Controladora Vuela Compaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Controladora Vuela Compaa 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 Controladora Vuela. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Controladora Vuela Compaa has no effect on the direction of Sun Life i.e., Sun Life and Controladora Vuela go up and down completely randomly.

Pair Corralation between Sun Life and Controladora Vuela

Assuming the 90 days horizon Sun Life Financial is expected to under-perform the Controladora Vuela. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 3.0 times less risky than Controladora Vuela. The stock trades about -0.13 of its potential returns per unit of risk. The Controladora Vuela Compaa is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  735.00  in Controladora Vuela Compaa on September 22, 2024 and sell it today you would earn a total of  40.00  from holding Controladora Vuela Compaa or generate 5.44% return on investment over 90 days.

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

Sun Life Financial  vs.  Controladora Vuela Compaa

Sun Life Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Life reported solid returns over the last few months and may actually be approaching a breakup point.

Controladora Vuela Compaa

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Controladora Vuela Compaa are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Controladora Vuela reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Controladora Vuela

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

The idea behind Sun Life Financial and Controladora Vuela Compaa 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.