Correlation Between Lendlease and Sun Life

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

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

Diversification Opportunities for Lendlease and Sun Life

0.48

Correlation Coefficient

Lendlease  Sun Life

Very weak diversification

The 3 months correlation between Lendlease and Sun is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group 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 Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and Sun Life go up and down completely randomly.

Pair Corralation between Lendlease and Sun Life

Assuming the 90 days trading horizon Lendlease Group is expected to generate 1.0 times more return on investment than Sun Life. However, Lendlease is 1.0 times more volatile than Sun Life Financial. It trades about -0.01 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.08 per unit of risk. If you would invest  365.00  in Lendlease Group on December 21, 2024 and sell it today you would lose (7.00) from holding Lendlease Group or give up 1.92% of portfolio value over 90 days.

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

Lendlease Group  vs.  Sun Life Financial

Lendlease Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lendlease is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 weak 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.

Pair Trading with Lendlease and Sun Life

The main advantage of trading using opposite Lendlease and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..