Correlation Between UmweltBank and SUN LIFE

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

By analyzing existing cross correlation between UmweltBank AG and SUN LIFE FINANCIAL, you can compare the effects of market volatilities on UmweltBank 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 UmweltBank with a short position of SUN LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of UmweltBank and SUN LIFE.

Diversification Opportunities for UmweltBank and SUN LIFE

0.9

Correlation Coefficient

UmweltBank  SUN LIFE

Almost no diversification

The 3 months correlation between UmweltBank and SUN is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and SUN LIFE FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN LIFE FINANCIAL and UmweltBank 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 UmweltBank AG 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 FINANCIAL has no effect on the direction of UmweltBank i.e., UmweltBank and SUN LIFE go up and down completely randomly.

Pair Corralation between UmweltBank and SUN LIFE

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the SUN LIFE. In addition to that, UmweltBank is 1.42 times more volatile than SUN LIFE FINANCIAL. It trades about -0.15 of its total potential returns per unit of risk. SUN LIFE FINANCIAL is currently generating about -0.08 per unit of volatility. If you would invest  5,591  in SUN LIFE FINANCIAL on December 22, 2024 and sell it today you would lose (391.00) from holding SUN LIFE FINANCIAL or give up 6.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

UmweltBank AG  vs.  SUN LIFE FINANCIAL

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with UmweltBank and SUN LIFE

The main advantage of trading using opposite UmweltBank and SUN LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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 UmweltBank AG and SUN LIFE FINANCIAL 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.