Correlation Between Sun Life and WD 40
Can any of the company-specific risk be diversified away by investing in both Sun Life and WD 40 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 WD 40 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 WD 40 CO, you can compare the effects of market volatilities on Sun Life and WD 40 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 WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and WD 40.
Diversification Opportunities for Sun Life and WD 40
Very poor diversification
The 3 months correlation between Sun and WD1 is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and WD 40 CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 CO 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 WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 CO has no effect on the direction of Sun Life i.e., Sun Life and WD 40 go up and down completely randomly.
Pair Corralation between Sun Life and WD 40
Assuming the 90 days horizon Sun Life Financial is expected to generate 0.77 times more return on investment than WD 40. However, Sun Life Financial is 1.3 times less risky than WD 40. It trades about -0.13 of its potential returns per unit of risk. WD 40 CO is currently generating about -0.42 per unit of risk. If you would invest 5,766 in Sun Life Financial on September 23, 2024 and sell it today you would lose (116.00) from holding Sun Life Financial or give up 2.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Life Financial vs. WD 40 CO
Performance |
Timeline |
Sun Life Financial |
WD 40 CO |
Sun Life and WD 40 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Life and WD 40
The main advantage of trading using opposite Sun Life and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.Sun Life vs. Berkshire Hathaway | Sun Life vs. Berkshire Hathaway | Sun Life vs. Zurich Insurance Group | Sun Life vs. American International Group |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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