Correlation Between EcoSynthetix and Sun Life

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

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

Diversification Opportunities for EcoSynthetix and Sun Life

0.68

Correlation Coefficient

EcoSynthetix  Sun Life

Poor diversification

The 3 months correlation between EcoSynthetix and Sun is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix 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 EcoSynthetix 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 EcoSynthetix 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 EcoSynthetix i.e., EcoSynthetix and Sun Life go up and down completely randomly.

Pair Corralation between EcoSynthetix and Sun Life

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 1.37 times less return on investment than Sun Life. In addition to that, EcoSynthetix is 3.19 times more volatile than Sun Life Financial. It trades about 0.01 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.05 per unit of volatility. If you would invest  1,655  in Sun Life Financial on September 13, 2024 and sell it today you would earn a total of  379.00  from holding Sun Life Financial or generate 22.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

EcoSynthetix  vs.  Sun Life Financial

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EcoSynthetix is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 EcoSynthetix and Sun Life

The main advantage of trading using opposite EcoSynthetix and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EcoSynthetix 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 EcoSynthetix 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.