Correlation Between Sun Lif and Tamarack Valley

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

Diversification Opportunities for Sun Lif and Tamarack Valley

-0.72

Correlation Coefficient

Sun Lif  Tamarack Valley

Pay attention - limited upside

The 3 months correlation between Sun and Tamarack is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy 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 Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of Sun Lif i.e., Sun Lif and Tamarack Valley go up and down completely randomly.

Pair Corralation between Sun Lif and Tamarack Valley

Assuming the 90 days trading horizon Sun Lif Non is expected to under-perform the Tamarack Valley. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Lif Non is 2.77 times less risky than Tamarack Valley. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Tamarack Valley Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  381.00  in Tamarack Valley Energy on September 3, 2024 and sell it today you would earn a total of  65.00  from holding Tamarack Valley Energy or generate 17.06% return on investment over 90 days.

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

Sun Lif Non  vs.  Tamarack Valley Energy

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Tamarack Valley Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tamarack Valley Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tamarack Valley displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Lif and Tamarack Valley

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

The idea behind Sun Lif Non and Tamarack Valley Energy 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.