Correlation Between Partners Value and Sun Life

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

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

Diversification Opportunities for Partners Value and Sun Life

0.24

Correlation Coefficient

Partners Value  Sun Life

Modest diversification

The 3 months correlation between Partners and Sun is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Partners Value Investments 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 Partners Value 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 Partners Value Investments 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 Partners Value i.e., Partners Value and Sun Life go up and down completely randomly.

Pair Corralation between Partners Value and Sun Life

Assuming the 90 days trading horizon Partners Value Investments is expected to generate 2.71 times more return on investment than Sun Life. However, Partners Value is 2.71 times more volatile than Sun Life Non. It trades about 0.12 of its potential returns per unit of risk. Sun Life Non is currently generating about 0.21 per unit of risk. If you would invest  13,000  in Partners Value Investments on November 20, 2024 and sell it today you would earn a total of  1,900  from holding Partners Value Investments or generate 14.62% return on investment over 90 days.

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

Partners Value Investments  vs.  Sun Life Non

Partners Value Inves

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partners Value Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Partners Value sustained solid returns over the last few months and may actually be approaching a breakup point.

Sun Life Non

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 16 (%) 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 March 2025.

Pair Trading with Partners Value and Sun Life

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

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.