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 Financial, 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

0.55

Correlation Coefficient

Northstar Clean  Sun Life

Very weak diversification

The 3 months correlation between Northstar and Sun is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies 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 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 Financial 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 horizon Northstar Clean Technologies is expected to generate 5.3 times more return on investment than Sun Life. However, Northstar Clean is 5.3 times more volatile than Sun Life Financial. It trades about 0.05 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.07 per unit of risk. If you would invest  13.00  in Northstar Clean Technologies on September 29, 2024 and sell it today you would earn a total of  14.00  from holding Northstar Clean Technologies or generate 107.69% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  Sun Life Financial

Northstar Clean Tech

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Sun Life Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.