Correlation Between Sun Life and Vivendi SE

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

Diversification Opportunities for Sun Life and Vivendi SE

-0.62

Correlation Coefficient

Sun Life  Vivendi SE

Excellent diversification

The 3 months correlation between Sun and Vivendi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi 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 Vivendi SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SE has no effect on the direction of Sun Life i.e., Sun Life and Vivendi SE go up and down completely randomly.

Pair Corralation between Sun Life and Vivendi SE

Assuming the 90 days horizon Sun Life Financial is expected to generate 0.27 times more return on investment than Vivendi SE. However, Sun Life Financial is 3.7 times less risky than Vivendi SE. It trades about 0.07 of its potential returns per unit of risk. Vivendi SE is currently generating about -0.03 per unit of risk. If you would invest  4,054  in Sun Life Financial on September 28, 2024 and sell it today you would earn a total of  1,596  from holding Sun Life Financial or generate 39.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.48%
Values	Daily Returns

Sun Life Financial  vs.  Vivendi SE

Sun Life Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vivendi SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivendi SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sun Life and Vivendi SE

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

The idea behind Sun Life Financial and Vivendi SE 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 Global Correlations module to find global opportunities by holding instruments from different markets.