Correlation Between SUN LIFE and Ring Energy

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

Diversification Opportunities for SUN LIFE and Ring Energy

-0.45

Correlation Coefficient

SUN LIFE  Ring Energy

Very good diversification

The 3 months correlation between SUN and Ring is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of SUN LIFE i.e., SUN LIFE and Ring Energy go up and down completely randomly.

Pair Corralation between SUN LIFE and Ring Energy

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to generate 0.31 times more return on investment than Ring Energy. However, SUN LIFE FINANCIAL is 3.25 times less risky than Ring Energy. It trades about 0.06 of its potential returns per unit of risk. Ring Energy is currently generating about -0.04 per unit of risk. If you would invest  4,999  in SUN LIFE FINANCIAL on April 24, 2025 and sell it today you would earn a total of  201.00  from holding SUN LIFE FINANCIAL or generate 4.02% 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.  Ring Energy

SUN LIFE FINANCIAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUN LIFE FINANCIAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SUN LIFE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ring Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SUN LIFE and Ring Energy

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

The idea behind SUN LIFE FINANCIAL and Ring 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.