Correlation Between Sun Life and SMUCKER

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

Diversification Opportunities for Sun Life and SMUCKER

0.52

Correlation Coefficient

Sun Life  SMUCKER

Very weak diversification

The 3 months correlation between Sun and SMUCKER is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and SMUCKER J M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMUCKER J M 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 SMUCKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMUCKER J M has no effect on the direction of Sun Life i.e., Sun Life and SMUCKER go up and down completely randomly.

Pair Corralation between Sun Life and SMUCKER

Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the SMUCKER. In addition to that, Sun Life is 1.25 times more volatile than SMUCKER J M. It trades about -0.04 of its total potential returns per unit of risk. SMUCKER J M is currently generating about 0.01 per unit of volatility. If you would invest  8,301  in SMUCKER J M on December 29, 2024 and sell it today you would earn a total of  1.00  from holding SMUCKER J M or generate 0.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.66%
Values	Daily Returns

Sun Life Financial  vs.  SMUCKER J M

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 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.

SMUCKER J M

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sun Life and SMUCKER

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

The idea behind Sun Life Financial and SMUCKER J M 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.