Correlation Between Axa SA and Sun Life

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

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

Diversification Opportunities for Axa SA and Sun Life

-0.23

Correlation Coefficient

Axa SA  Sun Life

Very good diversification

The 3 months correlation between Axa and Sun is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR 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 Axa SA 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 Axa SA ADR 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 Axa SA i.e., Axa SA and Sun Life go up and down completely randomly.

Pair Corralation between Axa SA and Sun Life

If you would invest  5,398  in Sun Life Financial on August 30, 2024 and sell it today you would earn a total of  694.00  from holding Sun Life Financial or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Axa SA ADR  vs.  Sun Life Financial

Axa SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axa SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Axa SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sun Life Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Axa SA and Sun Life

The main advantage of trading using opposite Axa SA and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa SA 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 Axa SA ADR 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.