Correlation Between Sun Life and Choice Properties

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

Diversification Opportunities for Sun Life and Choice Properties

-0.47

Correlation Coefficient

Sun Life  Choice Properties

Very good diversification

The 3 months correlation between Sun and Choice is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Non and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Sun Life i.e., Sun Life and Choice Properties go up and down completely randomly.

Pair Corralation between Sun Life and Choice Properties

Assuming the 90 days trading horizon Sun Life Non is expected to generate 0.59 times more return on investment than Choice Properties. However, Sun Life Non is 1.69 times less risky than Choice Properties. It trades about 0.39 of its potential returns per unit of risk. Choice Properties Real is currently generating about -0.1 per unit of risk. If you would invest  1,590  in Sun Life Non on October 9, 2024 and sell it today you would earn a total of  124.00  from holding Sun Life Non or generate 7.8% 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 Non  vs.  Choice Properties Real

Sun Life Non

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 9 (%) 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.

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sun Life and Choice Properties

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

The idea behind Sun Life Non and Choice Properties Real 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.