Correlation Between Sun Life and HF Sinclair

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

Diversification Opportunities for Sun Life and HF Sinclair

-0.43

Correlation Coefficient

Sun Life  HF Sinclair

Very good diversification

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

Pair Corralation between Sun Life and HF Sinclair

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.58 times more return on investment than HF Sinclair. However, Sun Life Financial is 1.72 times less risky than HF Sinclair. It trades about 0.46 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about 0.13 per unit of risk. If you would invest  5,514  in Sun Life Financial on September 5, 2024 and sell it today you would earn a total of  615.00  from holding Sun Life Financial or generate 11.15% 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.  HF Sinclair Corp

Sun Life Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sun Life and HF Sinclair

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

The idea behind Sun Life Financial and HF Sinclair 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.

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.