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
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fairfax and Sun is -0.73. 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 Holdings is expected to generate 0.86 times more return on investment than Sun Life. However, Fairfax Financial Holdings is 1.17 times less risky than Sun Life. It trades about 0.07 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.03 per unit of risk. If you would invest 1,992 in Fairfax Financial Holdings on September 6, 2024 and sell it today you would earn a total of 508.00 from holding Fairfax Financial Holdings or generate 25.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
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. Wishpond Technologies | Fairfax Financial vs. Doman Building Materials | Fairfax Financial vs. Labrador Iron Ore | Fairfax Financial vs. Falcon Energy Materials |
Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp | Sun Life vs. iShares Canadian HYBrid | Sun Life vs. Brompton European Dividend |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Share Portfolio Track or share privately all of your investments from the convenience of any device |