Correlation Between Sun Life and Fresenius

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

Diversification Opportunities for Sun Life and Fresenius

-0.74

Correlation Coefficient

Sun Life  Fresenius

Pay attention - limited upside

The 3 months correlation between Sun and Fresenius is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Sun Life i.e., Sun Life and Fresenius go up and down completely randomly.

Pair Corralation between Sun Life and Fresenius

Assuming the 90 days horizon Sun Life Financial is expected to under-perform the Fresenius. In addition to that, Sun Life is 1.03 times more volatile than Fresenius SE Co. It trades about -0.08 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.2 per unit of volatility. If you would invest  3,345  in Fresenius SE Co on December 22, 2024 and sell it today you would earn a total of  622.00  from holding Fresenius SE Co or generate 18.59% return on investment over 90 days.

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

Sun Life Financial  vs.  Fresenius SE Co

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fresenius SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Fresenius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Fresenius

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

The idea behind Sun Life Financial and Fresenius SE Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.