Correlation Between Sun Life and Advent Wireless

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

Diversification Opportunities for Sun Life and Advent Wireless

-0.53

Correlation Coefficient

Sun Life  Advent Wireless

Excellent diversification

The 3 months correlation between Sun and Advent is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless 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 Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Sun Life i.e., Sun Life and Advent Wireless go up and down completely randomly.

Pair Corralation between Sun Life and Advent Wireless

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 0.2 times more return on investment than Advent Wireless. However, Sun Life Financial is 5.07 times less risky than Advent Wireless. It trades about 0.23 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.07 per unit of risk. If you would invest  1,955  in Sun Life Financial on May 1, 2025 and sell it today you would earn a total of  153.00  from holding Sun Life Financial or generate 7.83% 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.  Advent Wireless

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 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sun Life and Advent Wireless

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

The idea behind Sun Life Financial and Advent Wireless 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 Transaction History module to view history of all your transactions and understand their impact on performance.