Correlation Between Primaris Retail and Sun Lif

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

By analyzing existing cross correlation between Primaris Retail RE and Sun Lif Non, you can compare the effects of market volatilities on Primaris Retail and Sun Lif 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 Primaris Retail with a short position of Sun Lif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primaris Retail and Sun Lif.

Diversification Opportunities for Primaris Retail and Sun Lif

-0.3

Correlation Coefficient

Primaris Retail  Sun Lif

Very good diversification

The 3 months correlation between Primaris and Sun is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Primaris Retail RE and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non and Primaris Retail 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 Primaris Retail RE are associated (or correlated) with Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of Primaris Retail i.e., Primaris Retail and Sun Lif go up and down completely randomly.

Pair Corralation between Primaris Retail and Sun Lif

Assuming the 90 days trading horizon Primaris Retail RE is expected to under-perform the Sun Lif. In addition to that, Primaris Retail is 1.65 times more volatile than Sun Lif Non. It trades about -0.22 of its total potential returns per unit of risk. Sun Lif Non is currently generating about 0.23 per unit of volatility. If you would invest  1,901  in Sun Lif Non on October 11, 2024 and sell it today you would earn a total of  81.00  from holding Sun Lif Non or generate 4.26% return on investment over 90 days.

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

Primaris Retail RE  vs.  Sun Lif Non

Primaris Retail RE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primaris Retail RE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Primaris Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Sun Lif Non

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Lif is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Primaris Retail and Sun Lif

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

The idea behind Primaris Retail RE and Sun Lif 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.