Correlation Between Sun Life and GRPH Old

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

Diversification Opportunities for Sun Life and GRPH Old

-0.38

Correlation Coefficient

Sun Life  GRPH Old

Very good diversification

The 3 months correlation between Sun and GRPH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and GRPH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRPH Old 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 GRPH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRPH Old has no effect on the direction of Sun Life i.e., Sun Life and GRPH Old go up and down completely randomly.

Pair Corralation between Sun Life and GRPH Old

Considering the 90-day investment horizon Sun Life is expected to generate 4.76 times less return on investment than GRPH Old. But when comparing it to its historical volatility, Sun Life Financial is 3.21 times less risky than GRPH Old. It trades about 0.05 of its potential returns per unit of risk. GRPH Old is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  207.00  in GRPH Old on October 25, 2024 and sell it today you would earn a total of  60.00  from holding GRPH Old or generate 28.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.89%
Values	Daily Returns

Sun Life Financial  vs.  GRPH Old

Sun Life Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

GRPH Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRPH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, GRPH Old is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sun Life and GRPH Old

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

The idea behind Sun Life Financial and GRPH Old 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 Transaction History module to view history of all your transactions and understand their impact on performance.