Correlation Between Sun Lif and Dorel Industries
Can any of the company-specific risk be diversified away by investing in both Sun Lif and Dorel 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 Lif and Dorel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Lif Non and Dorel Industries, you can compare the effects of market volatilities on Sun Lif and Dorel 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 Lif with a short position of Dorel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Dorel Industries.
Diversification Opportunities for Sun Lif and Dorel Industries
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sun and Dorel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Dorel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorel Industries and Sun Lif 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 Lif Non are associated (or correlated) with Dorel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorel Industries has no effect on the direction of Sun Lif i.e., Sun Lif and Dorel Industries go up and down completely randomly.
Pair Corralation between Sun Lif and Dorel Industries
Assuming the 90 days trading horizon Sun Lif Non is expected to generate 0.39 times more return on investment than Dorel Industries. However, Sun Lif Non is 2.55 times less risky than Dorel Industries. It trades about 0.06 of its potential returns per unit of risk. Dorel Industries is currently generating about -0.01 per unit of risk. If you would invest 1,402 in Sun Lif Non on September 24, 2024 and sell it today you would earn a total of 506.00 from holding Sun Lif Non or generate 36.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Lif Non vs. Dorel Industries
Performance |
Timeline |
Sun Lif Non |
Dorel Industries |
Sun Lif and Dorel Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Lif and Dorel Industries
The main advantage of trading using opposite Sun Lif and Dorel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, Dorel 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 Dorel Industries will offset losses from the drop in Dorel Industries' long position.Sun Lif vs. Sun Life Financial | Sun Lif vs. Sun Life Financial | Sun Lif vs. Sun Life Financial | Sun Lif vs. iA Financial |
Dorel Industries vs. Stella Jones | Dorel Industries vs. Winpak | Dorel Industries vs. Stantec | Dorel Industries vs. Gildan Activewear |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |