Correlation Between Sun Life and CCL Industries

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

By analyzing existing cross correlation between Sun Life Non and CCL Industries, you can compare the effects of market volatilities on Sun Life and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and CCL Industries.

Diversification Opportunities for Sun Life and CCL Industries

0.1

Correlation Coefficient

Sun Life  CCL Industries

Average diversification

The 3 months correlation between Sun and CCL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Non and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 Non are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Sun Life i.e., Sun Life and CCL Industries go up and down completely randomly.

Pair Corralation between Sun Life and CCL Industries

Assuming the 90 days trading horizon Sun Life Non is expected to generate 0.84 times more return on investment than CCL Industries. However, Sun Life Non is 1.19 times less risky than CCL Industries. It trades about 0.01 of its potential returns per unit of risk. CCL Industries is currently generating about -0.1 per unit of risk. If you would invest  1,689  in Sun Life Non on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Sun Life Non or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sun Life Non  vs.  CCL Industries

Sun Life Non

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Non 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 latest stock price disturbance, may contribute to short-term losses for the investors.

CCL Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sun Life and CCL Industries

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

The idea behind Sun Life Non and CCL Industries 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.