Correlation Between Sun Life and E-L Financial

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

Diversification Opportunities for Sun Life and E-L Financial

0.74

Correlation Coefficient

Sun Life  E-L Financial

Poor diversification

The 3 months correlation between Sun and E-L is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E-L Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of Sun Life i.e., Sun Life and E-L Financial go up and down completely randomly.

Pair Corralation between Sun Life and E-L Financial

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.3 times more return on investment than E-L Financial. However, Sun Life is 1.3 times more volatile than E L Financial Corp. It trades about 0.11 of its potential returns per unit of risk. E L Financial Corp is currently generating about 0.12 per unit of risk. If you would invest  2,034  in Sun Life Financial on July 2, 2025 and sell it today you would earn a total of  80.00  from holding Sun Life Financial or generate 3.93% return on investment over 90 days.

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

Sun Life Financial  vs.  E L Financial Corp

Sun Life Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 8 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

E L Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, E-L Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Life and E-L Financial

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

The idea behind Sun Life Financial and E L Financial Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.