Correlation Between Sun Lif and Tourmaline Oil

Can any of the company-specific risk be diversified away by investing in both Sun Lif and Tourmaline Oil 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 Lif and Tourmaline Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Lif Non and Tourmaline Oil Corp, you can compare the effects of market volatilities on Sun Lif and Tourmaline Oil 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 Lif with a short position of Tourmaline Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Tourmaline Oil.

Diversification Opportunities for Sun Lif and Tourmaline Oil

-0.59

Correlation Coefficient

Sun Lif  Tourmaline Oil

Excellent diversification

The 3 months correlation between Sun and Tourmaline is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Tourmaline Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Oil Corp and Sun Lif 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 Lif Non are associated (or correlated) with Tourmaline Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Oil Corp has no effect on the direction of Sun Lif i.e., Sun Lif and Tourmaline Oil go up and down completely randomly.

Pair Corralation between Sun Lif and Tourmaline Oil

Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Tourmaline Oil. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 1.99 times less risky than Tourmaline Oil. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Tourmaline Oil Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,808  in Tourmaline Oil Corp on September 12, 2024 and sell it today you would earn a total of  360.00  from holding Tourmaline Oil Corp or generate 6.2% return on investment over 90 days.

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

Sun Lif Non  vs.  Tourmaline Oil Corp

Sun Lif Non

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Lif Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Lif is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tourmaline Oil Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Oil Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Tourmaline Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sun Lif and Tourmaline Oil

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

The idea behind Sun Lif Non and Tourmaline Oil Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.