Correlation Between Sun Life and AG Mortgage

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

Diversification Opportunities for Sun Life and AG Mortgage

0.28

Correlation Coefficient

Sun Life  AG Mortgage

Modest diversification

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

Pair Corralation between Sun Life and AG Mortgage

Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the AG Mortgage. In addition to that, Sun Life is 4.16 times more volatile than AG Mortgage Investment. It trades about -0.04 of its total potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.29 per unit of volatility. If you would invest  2,516  in AG Mortgage Investment on October 25, 2024 and sell it today you would earn a total of  29.00  from holding AG Mortgage Investment or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sun Life Financial  vs.  AG Mortgage Investment

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.

AG Mortgage Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AG Mortgage is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sun Life and AG Mortgage

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

The idea behind Sun Life Financial and AG Mortgage Investment 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.