Correlation Between LFM Properties and Sun Life

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

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

Diversification Opportunities for LFM Properties and Sun Life

-0.48

Correlation Coefficient

LFM Properties  Sun Life

Very good diversification

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

Pair Corralation between LFM Properties and Sun Life

Assuming the 90 days trading horizon LFM Properties is expected to generate 1.8 times less return on investment than Sun Life. In addition to that, LFM Properties is 3.5 times more volatile than Sun Life Financial. It trades about 0.02 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.11 per unit of volatility. If you would invest  264,101  in Sun Life Financial on September 15, 2024 and sell it today you would earn a total of  90,899  from holding Sun Life Financial or generate 34.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.77%
Values	Daily Returns

LFM Properties Corp  vs.  Sun Life Financial

LFM Properties Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LFM Properties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sun Life Financial

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, Sun Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LFM Properties and Sun Life

The main advantage of trading using opposite LFM Properties and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LFM Properties 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 LFM Properties Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.