Correlation Between DelphX Capital and Sun Life

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

By analyzing existing cross correlation between DelphX Capital Markets and Sun Life Financial, you can compare the effects of market volatilities on DelphX Capital and Sun Life 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 DelphX Capital with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of DelphX Capital and Sun Life.

Diversification Opportunities for DelphX Capital and Sun Life

0.57

Correlation Coefficient

DelphX Capital  Sun Life

Very weak diversification

The 3 months correlation between DelphX and Sun is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding DelphX Capital Markets and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and DelphX Capital 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 DelphX Capital Markets are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of DelphX Capital i.e., DelphX Capital and Sun Life go up and down completely randomly.

Pair Corralation between DelphX Capital and Sun Life

Assuming the 90 days trading horizon DelphX Capital Markets is expected to generate 9.75 times more return on investment than Sun Life. However, DelphX Capital is 9.75 times more volatile than Sun Life Financial. It trades about 0.03 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.03 per unit of risk. If you would invest  13.00  in DelphX Capital Markets on February 14, 2024 and sell it today you would lose (3.00) from holding DelphX Capital Markets or give up 23.08% of portfolio value over 90 days.

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

DelphX Capital Markets  vs.  Sun Life Financial

DelphX Capital Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DelphX Capital Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sun Life Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sun Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DelphX Capital and Sun Life

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

The idea behind DelphX Capital Markets and Sun Life Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.