Correlation Between Sun Life and Globe Telecom
Can any of the company-specific risk be diversified away by investing in both Sun Life and Globe Telecom 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 Globe Telecom 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 Globe Telecom, you can compare the effects of market volatilities on Sun Life and Globe Telecom 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 Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Globe Telecom.
Diversification Opportunities for Sun Life and Globe Telecom
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Globe is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom 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 Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of Sun Life i.e., Sun Life and Globe Telecom go up and down completely randomly.
Pair Corralation between Sun Life and Globe Telecom
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 2.29 times more return on investment than Globe Telecom. However, Sun Life is 2.29 times more volatile than Globe Telecom. It trades about 0.07 of its potential returns per unit of risk. Globe Telecom is currently generating about 0.08 per unit of risk. If you would invest 257,940 in Sun Life Financial on September 4, 2024 and sell it today you would earn a total of 101,860 from holding Sun Life Financial or generate 39.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.47% |
| Values | Daily Returns |
Sun Life Financial vs. Globe Telecom
Performance |
| Timeline |
| Sun Life Financial |
| Globe Telecom |
Sun Life and Globe Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Globe Telecom
The main advantage of trading using opposite Sun Life and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Globe Telecom 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 Globe Telecom will offset losses from the drop in Globe Telecom's long position.| Sun Life vs. Manulife Financial Corp | Sun Life vs. GT Capital Holdings | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp |
| Globe Telecom vs. Top Frontier Investment | Globe Telecom vs. STI Education Systems | Globe Telecom vs. Allhome Corp | Globe Telecom vs. Semirara Mining 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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