Correlation Between Sun Life and Pinterest

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

Diversification Opportunities for Sun Life and Pinterest

-0.61

Correlation Coefficient

Sun Life  Pinterest

Excellent diversification

The 3 months correlation between Sun and Pinterest is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Sun Life i.e., Sun Life and Pinterest go up and down completely randomly.

Pair Corralation between Sun Life and Pinterest

Considering the 90-day investment horizon Sun Life is expected to generate 2.02 times less return on investment than Pinterest. But when comparing it to its historical volatility, Sun Life Financial is 2.61 times less risky than Pinterest. It trades about 0.06 of its potential returns per unit of risk. Pinterest is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,369  in Pinterest on December 2, 2024 and sell it today you would earn a total of  1,329  from holding Pinterest or generate 56.1% return on investment over 90 days.

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

Sun Life Financial  vs.  Pinterest

Sun Life Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pinterest

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pinterest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Pinterest

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

The idea behind Sun Life Financial and Pinterest 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.