Correlation Between Sun Peak and Definity Financial

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

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

Diversification Opportunities for Sun Peak and Definity Financial

0.19

Correlation Coefficient

Sun Peak  Definity Financial

Average diversification

The 3 months correlation between Sun and Definity is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial Corp and Sun Peak 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 Peak Metals are associated (or correlated) with Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Sun Peak i.e., Sun Peak and Definity Financial go up and down completely randomly.

Pair Corralation between Sun Peak and Definity Financial

Assuming the 90 days trading horizon Sun Peak is expected to generate 4.25 times less return on investment than Definity Financial. In addition to that, Sun Peak is 3.59 times more volatile than Definity Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Definity Financial Corp is currently generating about 0.03 per unit of volatility. If you would invest  5,805  in Definity Financial Corp on December 21, 2024 and sell it today you would earn a total of  141.00  from holding Definity Financial Corp or generate 2.43% return on investment over 90 days.

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

Sun Peak Metals  vs.  Definity Financial Corp

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Peak is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Definity Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Definity Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Definity Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sun Peak and Definity Financial

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

The idea behind Sun Peak Metals and Definity Financial Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.