Correlation Between Manila Mining and Sun Life
Can any of the company-specific risk be diversified away by investing in both Manila Mining 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 Manila Mining and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Mining Corp and Sun Life Financial, you can compare the effects of market volatilities on Manila Mining 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 Manila Mining with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Mining and Sun Life.
Diversification Opportunities for Manila Mining and Sun Life
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Manila and Sun is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Manila Mining Corp 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 Manila Mining 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 Manila Mining Corp 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 Manila Mining i.e., Manila Mining and Sun Life go up and down completely randomly.
Pair Corralation between Manila Mining and Sun Life
Assuming the 90 days trading horizon Manila Mining Corp is expected to under-perform the Sun Life. But the stock apears to be less risky and, when comparing its historical volatility, Manila Mining Corp is 2.73 times less risky than Sun Life. The stock trades about -0.66 of its potential returns per unit of risk. The Sun Life Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 296,978 in Sun Life Financial on September 1, 2024 and sell it today you would earn a total of 63,022 from holding Sun Life Financial or generate 21.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 57.89% |
| Values | Daily Returns |
Manila Mining Corp vs. Sun Life Financial
Performance |
| Timeline |
| Manila Mining Corp |
| Sun Life Financial |
Manila Mining and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Mining and Sun Life
The main advantage of trading using opposite Manila Mining and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Mining 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 Manila Mining Corp 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.| Sun Life vs. Manulife Financial Corp | Sun Life vs. GT Capital Holdings | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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