Correlation Between Sun Life and Athene Holding

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

Diversification Opportunities for Sun Life and Athene Holding

-0.46

Correlation Coefficient

Sun Life  Athene Holding

Very good diversification

The 3 months correlation between Sun and Athene is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of Sun Life i.e., Sun Life and Athene Holding go up and down completely randomly.

Pair Corralation between Sun Life and Athene Holding

Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Athene Holding. In addition to that, Sun Life is 7.85 times more volatile than Athene Holding. It trades about -0.03 of its total potential returns per unit of risk. Athene Holding is currently generating about 0.09 per unit of volatility. If you would invest  2,477  in Athene Holding on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Athene Holding or generate 0.89% 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 Financial  vs.  Athene Holding

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. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Athene Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athene Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Athene Holding 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 Athene Holding

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

The idea behind Sun Life Financial and Athene Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.