Correlation Between Sun Life and IShares Canadian

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Sun Life and IShares Canadian 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 IShares Canadian 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 iShares Canadian HYBrid, you can compare the effects of market volatilities on Sun Life and IShares Canadian 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and IShares Canadian.

Diversification Opportunities for Sun Life and IShares Canadian

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Sun and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of Sun Life i.e., Sun Life and IShares Canadian go up and down completely randomly.

Pair Corralation between Sun Life and IShares Canadian

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 2.04 times more return on investment than IShares Canadian. However, Sun Life is 2.04 times more volatile than iShares Canadian HYBrid. It trades about 0.05 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.08 per unit of risk. If you would invest  1,643  in Sun Life Financial on September 6, 2024 and sell it today you would earn a total of  344.00  from holding Sun Life Financial or generate 20.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sun Life Financial  vs.  iShares Canadian HYBrid

 Performance 
       Timeline  
Sun Life Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 recent stock price disturbance, may contribute to short-term losses for the investors.
iShares Canadian HYBrid 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sun Life and IShares Canadian Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sun Life and IShares Canadian

The main advantage of trading using opposite Sun Life and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.
The idea behind Sun Life Financial and iShares Canadian HYBrid 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.
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Global Correlations
Find global opportunities by holding instruments from different markets
Insider Screener
Find insiders across different sectors to evaluate their impact on performance