Correlation Between Sun Life and 26442CAH7

Can any of the company-specific risk be diversified away by investing in both Sun Life and 26442CAH7 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 26442CAH7 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 DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Sun Life and 26442CAH7 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 26442CAH7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and 26442CAH7.

Diversification Opportunities for Sun Life and 26442CAH7

-0.16

Correlation Coefficient

Sun Life  26442CAH7

Good diversification

The 3 months correlation between Sun and 26442CAH7 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS 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 26442CAH7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of Sun Life i.e., Sun Life and 26442CAH7 go up and down completely randomly.

Pair Corralation between Sun Life and 26442CAH7

Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the 26442CAH7. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.84 times less risky than 26442CAH7. The stock trades about -0.31 of its potential returns per unit of risk. The DUKE ENERGY CAROLINAS is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  10,155  in DUKE ENERGY CAROLINAS on October 11, 2024 and sell it today you would lose (258.00) from holding DUKE ENERGY CAROLINAS or give up 2.54% of portfolio value over 90 days.

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

Sun Life Financial  vs.  DUKE ENERGY CAROLINAS

Sun Life Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 4 (%) 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.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAH7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Life and 26442CAH7

The main advantage of trading using opposite Sun Life and 26442CAH7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, 26442CAH7 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 26442CAH7 will offset losses from the drop in 26442CAH7's long position.

The idea behind Sun Life Financial and DUKE ENERGY CAROLINAS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.