Correlation Between Rocky Mountain and Sun Lif

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

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

Diversification Opportunities for Rocky Mountain and Sun Lif

0.13

Correlation Coefficient

Rocky Mountain  Sun Lif

Average diversification

The 3 months correlation between Rocky and Sun is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor 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 Rocky Mountain 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 Rocky Mountain Liquor 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 Rocky Mountain i.e., Rocky Mountain and Sun Lif go up and down completely randomly.

Pair Corralation between Rocky Mountain and Sun Lif

Assuming the 90 days horizon Rocky Mountain Liquor is expected to under-perform the Sun Lif. In addition to that, Rocky Mountain is 3.91 times more volatile than Sun Lif Non. It trades about -0.05 of its total potential returns per unit of risk. Sun Lif Non is currently generating about 0.11 per unit of volatility. If you would invest  1,908  in Sun Lif Non on December 20, 2024 and sell it today you would earn a total of  162.00  from holding Sun Lif Non or generate 8.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Rocky Mountain Liquor  vs.  Sun Lif Non

Rocky Mountain Liquor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rocky Mountain Liquor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sun Lif Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Sun Lif may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rocky Mountain and Sun Lif

The main advantage of trading using opposite Rocky Mountain and Sun Lif positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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 Rocky Mountain Liquor 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.