Correlation Between Fairfax Financial and Sun Life
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial 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 Fairfax Financial and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fairfax Financial Holdings and Sun Life Financial, you can compare the effects of market volatilities on Fairfax Financial 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 Fairfax Financial with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Sun Life.
Diversification Opportunities for Fairfax Financial and Sun Life
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Sun is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings 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 Fairfax Financial 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 Fairfax Financial Holdings 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 Fairfax Financial i.e., Fairfax Financial and Sun Life go up and down completely randomly.
Pair Corralation between Fairfax Financial and Sun Life
Assuming the 90 days trading horizon Fairfax Financial is expected to generate 1.17 times less return on investment than Sun Life. But when comparing it to its historical volatility, Fairfax Financial Holdings is 1.9 times less risky than Sun Life. It trades about 0.19 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,972 in Sun Life Financial on September 7, 2024 and sell it today you would earn a total of 36.00 from holding Sun Life Financial or generate 1.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Fairfax Financial Holdings vs. Sun Life Financial
Performance |
Timeline |
Fairfax Financial |
Sun Life Financial |
Fairfax Financial and Sun Life Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fairfax Financial and Sun Life
The main advantage of trading using opposite Fairfax Financial and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial 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.Fairfax Financial vs. UnitedHealth Group CDR | Fairfax Financial vs. Bip Investment Corp | Fairfax Financial vs. Northstar Clean Technologies | Fairfax Financial vs. CVS HEALTH CDR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Transaction History View history of all your transactions and understand their impact on performance | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |