Correlation Between Sun Life and Bird Construction

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

Diversification Opportunities for Sun Life and Bird Construction

0.88

Correlation Coefficient

Sun Life  Bird Construction

Very poor diversification

The 3 months correlation between Sun and Bird is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction 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 Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of Sun Life i.e., Sun Life and Bird Construction go up and down completely randomly.

Pair Corralation between Sun Life and Bird Construction

Assuming the 90 days trading horizon Sun Life is expected to generate 5.17 times less return on investment than Bird Construction. But when comparing it to its historical volatility, Sun Life Financial is 2.21 times less risky than Bird Construction. It trades about 0.15 of its potential returns per unit of risk. Bird Construction is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,076  in Bird Construction on April 22, 2025 and sell it today you would earn a total of  894.00  from holding Bird Construction or generate 43.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Sun Life Financial  vs.  Bird Construction

Sun Life Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical and fundamental indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Bird Construction

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bird Construction are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bird Construction displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Bird Construction

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

The idea behind Sun Life Financial and Bird Construction 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.