Correlation Between Sun Life and Mosaic

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

Diversification Opportunities for Sun Life and Mosaic

-0.19

Correlation Coefficient

Sun Life  Mosaic

Good diversification

The 3 months correlation between Sun and Mosaic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Sun Life i.e., Sun Life and Mosaic go up and down completely randomly.

Pair Corralation between Sun Life and Mosaic

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.48 times more return on investment than Mosaic. However, Sun Life Financial is 2.09 times less risky than Mosaic. It trades about 0.07 of its potential returns per unit of risk. The Mosaic is currently generating about -0.05 per unit of risk. If you would invest  4,312  in Sun Life Financial on September 29, 2024 and sell it today you would earn a total of  1,636  from holding Sun Life Financial or generate 37.94% 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.  The Mosaic

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.

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sun Life and Mosaic

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

The idea behind Sun Life Financial and The Mosaic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.