Correlation Between Quipt Home and Sun Life

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

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

Diversification Opportunities for Quipt Home and Sun Life

0.5

Correlation Coefficient

Quipt Home  Sun Life

Very weak diversification

The 3 months correlation between Quipt and Sun is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical 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 Quipt Home 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 Quipt Home Medical 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 Quipt Home i.e., Quipt Home and Sun Life go up and down completely randomly.

Pair Corralation between Quipt Home and Sun Life

Assuming the 90 days trading horizon Quipt Home Medical is expected to generate 4.14 times more return on investment than Sun Life. However, Quipt Home is 4.14 times more volatile than Sun Life Financial. It trades about 0.07 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.01 per unit of risk. If you would invest  393.00  in Quipt Home Medical on September 18, 2024 and sell it today you would earn a total of  45.00  from holding Quipt Home Medical or generate 11.45% return on investment over 90 days.

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

Quipt Home Medical  vs.  Sun Life Financial

Quipt Home Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Sun Life Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Quipt Home and Sun Life

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

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.