Correlation Between Sun Lif and Whitecap Resources

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

Diversification Opportunities for Sun Lif and Whitecap Resources

-0.17

Correlation Coefficient

Sun Lif  Whitecap Resources

Good diversification

The 3 months correlation between Sun and Whitecap is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Sun Lif i.e., Sun Lif and Whitecap Resources go up and down completely randomly.

Pair Corralation between Sun Lif and Whitecap Resources

Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Whitecap Resources. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 1.86 times less risky than Whitecap Resources. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Whitecap Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  972.00  in Whitecap Resources on September 12, 2024 and sell it today you would earn a total of  10.00  from holding Whitecap Resources or generate 1.03% return on investment over 90 days.

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

Sun Lif Non  vs.  Whitecap Resources

Sun Lif Non

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Lif Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Lif is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Whitecap Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Whitecap Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Whitecap Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sun Lif and Whitecap Resources

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

The idea behind Sun Lif Non and Whitecap Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.