Correlation Between Sun Life and Philex Mining
Can any of the company-specific risk be diversified away by investing in both Sun Life and Philex Mining 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 Philex Mining 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 Philex Mining Corp, you can compare the effects of market volatilities on Sun Life and Philex Mining 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 Philex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Philex Mining.
Diversification Opportunities for Sun Life and Philex Mining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sun and Philex is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp 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 Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of Sun Life i.e., Sun Life and Philex Mining go up and down completely randomly.
Pair Corralation between Sun Life and Philex Mining
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 2.5 times more return on investment than Philex Mining. However, Sun Life is 2.5 times more volatile than Philex Mining Corp. It trades about 0.16 of its potential returns per unit of risk. Philex Mining Corp is currently generating about -0.44 per unit of risk. If you would invest 300,000 in Sun Life Financial on August 25, 2024 and sell it today you would earn a total of 40,000 from holding Sun Life Financial or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Sun Life Financial vs. Philex Mining Corp
Performance |
| Timeline |
| Sun Life Financial |
| Philex Mining Corp |
Sun Life and Philex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Philex Mining
The main advantage of trading using opposite Sun Life and Philex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Philex Mining 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 Philex Mining will offset losses from the drop in Philex Mining's long position.| Sun Life vs. Manulife Financial Corp | Sun Life vs. National Reinsurance | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp |
| Philex Mining vs. Atok Big Wedge | Philex Mining vs. Atlas Consolidated Mining | Philex Mining vs. Lepanto Consolidated Mining | Philex Mining vs. Apex Mining Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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