Correlation Between Suntrust Home and Sun Life

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

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

Diversification Opportunities for Suntrust Home and Sun Life

-0.16

Correlation Coefficient

Suntrust Home  Sun Life

Good diversification

The 3 months correlation between Suntrust and Sun is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers 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 Suntrust Home 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 Suntrust Home Developers 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 Suntrust Home i.e., Suntrust Home and Sun Life go up and down completely randomly.

Pair Corralation between Suntrust Home and Sun Life

Assuming the 90 days trading horizon Suntrust Home Developers is expected to under-perform the Sun Life. In addition to that, Suntrust Home is 2.35 times more volatile than Sun Life Financial. It trades about -0.02 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.17 per unit of volatility. If you would invest  340,000  in Sun Life Financial on April 8, 2025 and sell it today you would earn a total of  10,200  from holding Sun Life Financial or generate 3.0% return on investment over 90 days.

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

Suntrust Home Developers  vs.  Sun Life Financial

Suntrust Home Developers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Suntrust Home is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sun Life Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sun Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suntrust Home and Sun Life

The main advantage of trading using opposite Suntrust Home and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntrust Home 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 Suntrust Home Developers 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.