Correlation Between Sun Life and Element Fleet

Can any of the company-specific risk be diversified away by investing in both Sun Life and Element Fleet 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 Element Fleet 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 Element Fleet Management, you can compare the effects of market volatilities on Sun Life and Element Fleet 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 Element Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Element Fleet.

Diversification Opportunities for Sun Life and Element Fleet

-0.43

Correlation Coefficient

Sun Life  Element Fleet

Very good diversification

The 3 months correlation between Sun and Element is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Element Fleet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Fleet Management 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 Element Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Fleet Management has no effect on the direction of Sun Life i.e., Sun Life and Element Fleet go up and down completely randomly.

Pair Corralation between Sun Life and Element Fleet

Assuming the 90 days trading horizon Sun Life Financial is expected to under-perform the Element Fleet. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.55 times less risky than Element Fleet. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Element Fleet Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,801  in Element Fleet Management on September 2, 2024 and sell it today you would earn a total of  169.00  from holding Element Fleet Management or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sun Life Financial  vs.  Element Fleet Management

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.

Element Fleet Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sun Life and Element Fleet

The main advantage of trading using opposite Sun Life and Element Fleet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Element Fleet 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 Element Fleet will offset losses from the drop in Element Fleet's long position.

The idea behind Sun Life Financial and Element Fleet Management 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.