Correlation Between Lion One and Sun Life

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

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

Diversification Opportunities for Lion One and Sun Life

-0.83

Correlation Coefficient

Lion One  Sun Life

Pay attention - limited upside

The 3 months correlation between Lion and Sun is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals 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 Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Sun Life go up and down completely randomly.

Pair Corralation between Lion One and Sun Life

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Sun Life. In addition to that, Lion One is 4.36 times more volatile than Sun Life Financial. It trades about -0.18 of its total potential returns per unit of risk. Sun Life Financial is currently generating about -0.09 per unit of volatility. If you would invest  6,022  in Sun Life Financial on September 21, 2024 and sell it today you would lose (105.00) from holding Sun Life Financial or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Lion One Metals  vs.  Sun Life Financial

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sun Life Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 6 (%) 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 Lion One and Sun Life

The main advantage of trading using opposite Lion One and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.