Correlation Between Sun Lif and Sun Life

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

Diversification Opportunities for Sun Lif and Sun Life

-0.62

Correlation Coefficient

Sun Lif  Sun Life

Excellent diversification

The 3 months correlation between Sun and Sun is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Sun Lif i.e., Sun Lif and Sun Life go up and down completely randomly.

Pair Corralation between Sun Lif and Sun Life

Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Sun Life. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 1.43 times less risky than Sun Life. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Sun Life Financial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  8,182  in Sun Life Financial on December 6, 2024 and sell it today you would lose (156.00) from holding Sun Life Financial or give up 1.91% of portfolio value over 90 days.

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

Sun Lif Non  vs.  Sun Life Financial

Sun Lif Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Sun Lif may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sun Life Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators 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 Lif and Sun Life

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

The idea behind Sun Lif Non and Sun Life Financial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.