Correlation Between Sun Life and Brompton European
Can any of the company-specific risk be diversified away by investing in both Sun Life and Brompton European 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 Sun Life and Brompton European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Brompton European Dividend, you can compare the effects of market volatilities on Sun Life and Brompton European 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 Sun Life with a short position of Brompton European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Brompton European.
Diversification Opportunities for Sun Life and Brompton European
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sun and Brompton is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Brompton European Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton European and Sun Life 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 Sun Life Financial are associated (or correlated) with Brompton European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton European has no effect on the direction of Sun Life i.e., Sun Life and Brompton European go up and down completely randomly.
Pair Corralation between Sun Life and Brompton European
Assuming the 90 days trading horizon Sun Life Financial is expected to under-perform the Brompton European. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.82 times less risky than Brompton European. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Brompton European Dividend is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,051 in Brompton European Dividend on September 5, 2024 and sell it today you would earn a total of 21.00 from holding Brompton European Dividend or generate 2.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Life Financial vs. Brompton European Dividend
Performance |
Timeline |
Sun Life Financial |
Brompton European |
Sun Life and Brompton European Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Life and Brompton European
The main advantage of trading using opposite Sun Life and Brompton European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Brompton European 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 Brompton European will offset losses from the drop in Brompton European's long position.Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp | Sun Life vs. iShares Canadian HYBrid | Sun Life vs. Brompton European Dividend |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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