Correlation Between Sun Life and Winpak

Can any of the company-specific risk be diversified away by investing in both Sun Life and Winpak 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 Winpak 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 Winpak, you can compare the effects of market volatilities on Sun Life and Winpak 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 Winpak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Winpak.

Diversification Opportunities for Sun Life and Winpak

-0.49

Correlation Coefficient

Sun Life  Winpak

Very good diversification

The 3 months correlation between Sun and Winpak is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Sun Life i.e., Sun Life and Winpak go up and down completely randomly.

Pair Corralation between Sun Life and Winpak

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.52 times more return on investment than Winpak. However, Sun Life Financial is 1.92 times less risky than Winpak. It trades about 0.09 of its potential returns per unit of risk. Winpak is currently generating about -0.11 per unit of risk. If you would invest  1,989  in Sun Life Financial on November 29, 2024 and sell it today you would earn a total of  73.00  from holding Sun Life Financial or generate 3.67% return on investment over 90 days.

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

Sun Life Financial  vs.  Winpak

Sun Life Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Winpak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winpak has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sun Life and Winpak

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

The idea behind Sun Life Financial and Winpak 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 Commodity Directory module to find actively traded commodities issued by global exchanges.