Correlation Between Sun Life and Union Bank

Can any of the company-specific risk be diversified away by investing in both Sun Life and Union Bank 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 Union Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Life Financial and Union Bank of, you can compare the effects of market volatilities on Sun Life and Union Bank 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 Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Union Bank.

Diversification Opportunities for Sun Life and Union Bank

-0.28

Correlation Coefficient

Sun Life  Union Bank

Very good diversification

The 3 months correlation between Sun and Union is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank 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 Financial are associated (or correlated) with Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Sun Life i.e., Sun Life and Union Bank go up and down completely randomly.

Pair Corralation between Sun Life and Union Bank

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.45 times more return on investment than Union Bank. However, Sun Life is 1.45 times more volatile than Union Bank of. It trades about 0.07 of its potential returns per unit of risk. Union Bank of is currently generating about -0.03 per unit of risk. If you would invest  250,180  in Sun Life Financial on September 14, 2024 and sell it today you would earn a total of  107,820  from holding Sun Life Financial or generate 43.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.92%
Values	Daily Returns

Sun Life Financial  vs.  Union Bank of

Sun Life Financial

Risk-Adjusted Performance

0 of 100

OK

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 rather unsteady technical and fundamental indicators, Sun Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

Union Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Union Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sun Life and Union Bank

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

The idea behind Sun Life Financial and Union Bank of 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.