Correlation Between Tarku Resources and Sun Life

Can any of the company-specific risk be diversified away by investing in both Tarku Resources and Sun Life 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 Tarku Resources and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tarku Resources and Sun Life Non, you can compare the effects of market volatilities on Tarku Resources and Sun Life 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 Tarku Resources with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tarku Resources and Sun Life.

Diversification Opportunities for Tarku Resources and Sun Life

-0.27

Correlation Coefficient

Tarku Resources  Sun Life

Very good diversification

The 3 months correlation between Tarku and Sun is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non and Tarku Resources 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 Tarku Resources are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Non has no effect on the direction of Tarku Resources i.e., Tarku Resources and Sun Life go up and down completely randomly.

Pair Corralation between Tarku Resources and Sun Life

Assuming the 90 days horizon Tarku Resources is not expected to generate positive returns. Moreover, Tarku Resources is 16.42 times more volatile than Sun Life Non. It trades away all of its potential returns to assume current level of volatility. Sun Life Non is currently generating about 0.02 per unit of risk. If you would invest  1,706  in Sun Life Non on December 3, 2024 and sell it today you would earn a total of  9.00  from holding Sun Life Non or generate 0.53% return on investment over 90 days.

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

Tarku Resources  vs.  Sun Life Non

Tarku Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tarku Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Sun Life Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tarku Resources and Sun Life

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

The idea behind Tarku Resources and Sun Life Non 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.