Correlation Between Sun Life and Micromobility

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

Diversification Opportunities for Sun Life and Micromobility

-0.65

Correlation Coefficient

Sun Life  Micromobility

Excellent diversification

The 3 months correlation between Sun and Micromobility is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Sun Life i.e., Sun Life and Micromobility go up and down completely randomly.

Pair Corralation between Sun Life and Micromobility

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.08 times more return on investment than Micromobility. However, Sun Life Financial is 12.44 times less risky than Micromobility. It trades about 0.06 of its potential returns per unit of risk. Micromobility is currently generating about 0.0 per unit of risk. If you would invest  4,428  in Sun Life Financial on October 3, 2024 and sell it today you would earn a total of  1,506  from holding Sun Life Financial or generate 34.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	26.67%
Values	Daily Returns

Sun Life Financial  vs.  Micromobility

Sun Life Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 5 (%) 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.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Micromobility is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sun Life and Micromobility

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

The idea behind Sun Life Financial and Micromobility 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.