Correlation Between Sun Life and Four Seasons
Can any of the company-specific risk be diversified away by investing in both Sun Life and Four Seasons 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 Four Seasons 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 Four Seasons Education, you can compare the effects of market volatilities on Sun Life and Four Seasons 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 Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Four Seasons.
Diversification Opportunities for Sun Life and Four Seasons
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Four is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Sun Life i.e., Sun Life and Four Seasons go up and down completely randomly.
Pair Corralation between Sun Life and Four Seasons
Considering the 90-day investment horizon Sun Life is expected to generate 2.3 times less return on investment than Four Seasons. But when comparing it to its historical volatility, Sun Life Financial is 4.5 times less risky than Four Seasons. It trades about 0.13 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Four Seasons Education on September 17, 2024 and sell it today you would earn a total of 132.00 from holding Four Seasons Education or generate 13.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Life Financial vs. Four Seasons Education
Performance |
Timeline |
Sun Life Financial |
Four Seasons Education |
Sun Life and Four Seasons Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Life and Four Seasons
The main advantage of trading using opposite Sun Life and Four Seasons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Four Seasons 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 Four Seasons will offset losses from the drop in Four Seasons' long position.Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
Four Seasons vs. Laureate Education | Four Seasons vs. American Public Education | Four Seasons vs. Adtalem Global Education | Four Seasons vs. Afya |
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 CEOs Directory module to screen CEOs from public companies around the world.
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