Correlation Between Sun Life and Fission 30

Can any of the company-specific risk be diversified away by investing in both Sun Life and Fission 30 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 Sun Life and Fission 30 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Life Financial and Fission 30 Corp, you can compare the effects of market volatilities on Sun Life and Fission 30 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 Sun Life with a short position of Fission 30. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Fission 30.

Diversification Opportunities for Sun Life and Fission 30

0.53

Correlation Coefficient

Sun Life  Fission 30

Very weak diversification

The 3 months correlation between Sun and Fission is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Fission 30 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fission 30 Corp and Sun Life 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 Sun Life Financial are associated (or correlated) with Fission 30. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fission 30 Corp has no effect on the direction of Sun Life i.e., Sun Life and Fission 30 go up and down completely randomly.

Pair Corralation between Sun Life and Fission 30

Assuming the 90 days trading horizon Sun Life is expected to generate 1.24 times less return on investment than Fission 30. But when comparing it to its historical volatility, Sun Life Financial is 7.61 times less risky than Fission 30. It trades about 0.16 of its potential returns per unit of risk. Fission 30 Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Fission 30 Corp on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Fission 30 Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Sun Life Financial  vs.  Fission 30 Corp

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 current stock price disturbance, may contribute to short-term losses for the investors.

Fission 30 Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fission 30 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fission 30 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sun Life and Fission 30

The main advantage of trading using opposite Sun Life and Fission 30 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Fission 30 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 Fission 30 will offset losses from the drop in Fission 30's long position.

The idea behind Sun Life Financial and Fission 30 Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.