Correlation Between Sun Life and Cymbria

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

Diversification Opportunities for Sun Life and Cymbria

-0.54

Correlation Coefficient

Sun Life  Cymbria

Excellent diversification

The 3 months correlation between Sun and Cymbria is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Non and Cymbria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cymbria 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 Cymbria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cymbria has no effect on the direction of Sun Life i.e., Sun Life and Cymbria go up and down completely randomly.

Pair Corralation between Sun Life and Cymbria

Assuming the 90 days trading horizon Sun Life Non is expected to under-perform the Cymbria. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Life Non is 1.62 times less risky than Cymbria. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Cymbria is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,045  in Cymbria on September 13, 2024 and sell it today you would earn a total of  565.00  from holding Cymbria or generate 8.02% 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.  Cymbria

Sun Life Non

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Cymbria

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cymbria are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Cymbria may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sun Life and Cymbria

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

The idea behind Sun Life Non and Cymbria 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.