Correlation Between Applied Materials, and Sun Life

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

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

Diversification Opportunities for Applied Materials, and Sun Life

0.52

Correlation Coefficient

Applied Materials,  Sun Life

Very weak diversification

The 3 months correlation between Applied and Sun is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, 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 Applied Materials, 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 Applied Materials, 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 Applied Materials, i.e., Applied Materials, and Sun Life go up and down completely randomly.

Pair Corralation between Applied Materials, and Sun Life

Assuming the 90 days trading horizon Applied Materials, is expected to generate 3.46 times more return on investment than Sun Life. However, Applied Materials, is 3.46 times more volatile than Sun Life Financial. It trades about 0.12 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.18 per unit of risk. If you would invest  1,887  in Applied Materials, on May 17, 2025 and sell it today you would earn a total of  256.00  from holding Applied Materials, or generate 13.57% return on investment over 90 days.

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

Applied Materials,  vs.  Sun Life Financial

Applied Materials,

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Applied Materials, exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Materials, and Sun Life

The main advantage of trading using opposite Applied Materials, and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, 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 Applied Materials, 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.