Correlation Between Purpose Multi and Sun Life

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Can any of the company-specific risk be diversified away by investing in both Purpose Multi 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 Purpose Multi and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purpose Multi Asset Income and Sun Life Non, you can compare the effects of market volatilities on Purpose Multi 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 Purpose Multi with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Multi and Sun Life.

Diversification Opportunities for Purpose Multi and Sun Life

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Purpose and Sun is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Asset Income and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non and Purpose Multi 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 Purpose Multi Asset Income 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 Non has no effect on the direction of Purpose Multi i.e., Purpose Multi and Sun Life go up and down completely randomly.

Pair Corralation between Purpose Multi and Sun Life

Assuming the 90 days trading horizon Purpose Multi is expected to generate 16.58 times less return on investment than Sun Life. In addition to that, Purpose Multi is 1.07 times more volatile than Sun Life Non. It trades about 0.02 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.32 per unit of volatility. If you would invest  1,609  in Sun Life Non on October 22, 2024 and sell it today you would earn a total of  178.00  from holding Sun Life Non or generate 11.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Purpose Multi Asset Income  vs.  Sun Life Non

 Performance 
       Timeline  
Purpose Multi Asset 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Multi Asset Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Sun Life Non 

Risk-Adjusted Performance

25 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Purpose Multi and Sun Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Purpose Multi and Sun Life

The main advantage of trading using opposite Purpose Multi and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Multi 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 Purpose Multi Asset Income and Sun Life Non 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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