Correlation Between Sun Life and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both Sun Life and Brookfield Asset 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 Brookfield Asset 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 Brookfield Asset Management, you can compare the effects of market volatilities on Sun Life and Brookfield Asset 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 Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Brookfield Asset.
Diversification Opportunities for Sun Life and Brookfield Asset
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sun and Brookfield is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man 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 Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Sun Life i.e., Sun Life and Brookfield Asset go up and down completely randomly.
Pair Corralation between Sun Life and Brookfield Asset
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.3 times more return on investment than Brookfield Asset. However, Sun Life Financial is 3.34 times less risky than Brookfield Asset. It trades about 0.01 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about -0.07 per unit of risk. If you would invest 2,021 in Sun Life Financial on December 31, 2024 and sell it today you would earn a total of 8.00 from holding Sun Life Financial or generate 0.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Life Financial vs. Brookfield Asset Management
Performance |
Timeline |
Sun Life Financial |
Brookfield Asset Man |
Sun Life and Brookfield Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Life and Brookfield Asset
The main advantage of trading using opposite Sun Life and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Brookfield Asset 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 Brookfield Asset will offset losses from the drop in Brookfield Asset's long position.Sun Life vs. Ramp Metals | Sun Life vs. Hemisphere Energy | Sun Life vs. Mako Mining Corp | Sun Life vs. Giga Metals Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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