Correlation Between Sun Life and Newmont

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

Diversification Opportunities for Sun Life and Newmont

-0.39

Correlation Coefficient

Sun Life  Newmont

Very good diversification

The 3 months correlation between Sun and Newmont is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Sun Life i.e., Sun Life and Newmont go up and down completely randomly.

Pair Corralation between Sun Life and Newmont

Assuming the 90 days horizon Sun Life Financial is expected to under-perform the Newmont. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.27 times less risky than Newmont. The stock trades about -0.08 of its potential returns per unit of risk. The Newmont is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,666  in Newmont on December 21, 2024 and sell it today you would earn a total of  740.00  from holding Newmont or generate 20.19% 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.  Newmont

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 unsteady 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.

Newmont

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Newmont unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Newmont

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

The idea behind Sun Life Financial and Newmont 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.