Correlation Between Sun Life and Definity Financial
Can any of the company-specific risk be diversified away by investing in both Sun Life and Definity Financial 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 Definity Financial 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 Definity Financial Corp, you can compare the effects of market volatilities on Sun Life and Definity Financial 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 Definity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Definity Financial.
Diversification Opportunities for Sun Life and Definity Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Definity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial 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 Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Sun Life i.e., Sun Life and Definity Financial go up and down completely randomly.
Pair Corralation between Sun Life and Definity Financial
Assuming the 90 days trading horizon Sun Life is expected to generate 3.72 times less return on investment than Definity Financial. But when comparing it to its historical volatility, Sun Life Financial is 1.97 times less risky than Definity Financial. It trades about 0.05 of its potential returns per unit of risk. Definity Financial Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,799 in Definity Financial Corp on December 30, 2024 and sell it today you would earn a total of 478.00 from holding Definity Financial Corp or generate 8.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Life Financial vs. Definity Financial Corp
Performance |
Timeline |
Sun Life Financial |
Definity Financial Corp |
Sun Life and Definity Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Life and Definity Financial
The main advantage of trading using opposite Sun Life and Definity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Definity Financial 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 Definity Financial will offset losses from the drop in Definity Financial's long position.Sun Life vs. Empire Metals Corp | Sun Life vs. Flow Beverage Corp | Sun Life vs. Ramp Metals | Sun Life vs. InPlay Oil Corp |
Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |