Correlation Between PHN Multi and Sun Life

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

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

Diversification Opportunities for PHN Multi and Sun Life

-0.76

Correlation Coefficient

PHN Multi  Sun Life

Pay attention - limited upside

The 3 months correlation between PHN and Sun is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap 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 PHN Multi 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 PHN Multi Style All Cap 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 PHN Multi i.e., PHN Multi and Sun Life go up and down completely randomly.

Pair Corralation between PHN Multi and Sun Life

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to generate 0.98 times more return on investment than Sun Life. However, PHN Multi Style All Cap is 1.02 times less risky than Sun Life. It trades about 0.32 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.05 per unit of risk. If you would invest  2,544  in PHN Multi Style All Cap on September 9, 2024 and sell it today you would earn a total of  368.00  from holding PHN Multi Style All Cap or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

PHN Multi Style All Cap  vs.  Sun Life Financial

PHN Multi Style

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, PHN Multi displayed solid returns over the last few months and may actually be approaching a breakup point.

Sun Life Financial

Risk-Adjusted Performance

0 of 100

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 somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PHN Multi and Sun Life

The main advantage of trading using opposite PHN Multi and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHN Multi 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 PHN Multi Style All Cap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.