Correlation Between Chicago Atlantic and Sun Life

Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Sun Life 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 Chicago Atlantic and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chicago Atlantic BDC, and Sun Life Financial, you can compare the effects of market volatilities on Chicago Atlantic and Sun Life 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 Chicago Atlantic with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Sun Life.

Diversification Opportunities for Chicago Atlantic and Sun Life

0.07

Correlation Coefficient

Chicago Atlantic  Sun Life

Significant diversification

The 3 months correlation between Chicago and Sun is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic BDC, and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Chicago Atlantic 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 Chicago Atlantic BDC, are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Sun Life go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Sun Life

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 1.4 times less return on investment than Sun Life. In addition to that, Chicago Atlantic is 1.55 times more volatile than Sun Life Financial. It trades about 0.08 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.17 per unit of volatility. If you would invest  4,815  in Sun Life Financial on October 4, 2024 and sell it today you would earn a total of  1,119  from holding Sun Life Financial or generate 23.24% return on investment over 90 days.

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

Chicago Atlantic BDC,  vs.  Sun Life Financial

Chicago Atlantic BDC,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic BDC, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Sun Life Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chicago Atlantic and Sun Life

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

The idea behind Chicago Atlantic BDC, and Sun Life Financial 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.