Correlation Between Northstar Clean and Sun Life

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

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

Diversification Opportunities for Northstar Clean and Sun Life

0.35

Correlation Coefficient

Northstar Clean  Sun Life

Weak diversification

The 3 months correlation between Northstar and Sun is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies 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 Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and Sun Life go up and down completely randomly.

Pair Corralation between Northstar Clean and Sun Life

Assuming the 90 days trading horizon Northstar Clean is expected to generate 95.25 times less return on investment than Sun Life. In addition to that, Northstar Clean is 3.35 times more volatile than Sun Life Non. It trades about 0.0 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.04 per unit of volatility. If you would invest  1,665  in Sun Life Non on December 24, 2024 and sell it today you would earn a total of  35.00  from holding Sun Life Non or generate 2.1% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  Sun Life Non

Northstar Clean Tech

Risk-Adjusted Performance

Insignificant

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

Sun Life Non

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Northstar Clean and Sun Life

The main advantage of trading using opposite Northstar Clean and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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 Northstar Clean Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.