Correlation Between Sun Life and Rizal Commercial
Can any of the company-specific risk be diversified away by investing in both Sun Life and Rizal Commercial 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 Rizal Commercial 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 Rizal Commercial Banking, you can compare the effects of market volatilities on Sun Life and Rizal Commercial 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 Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Rizal Commercial.
Diversification Opportunities for Sun Life and Rizal Commercial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Rizal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Rizal Commercial Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rizal Commercial Banking 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 Rizal Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rizal Commercial Banking has no effect on the direction of Sun Life i.e., Sun Life and Rizal Commercial go up and down completely randomly.
Pair Corralation between Sun Life and Rizal Commercial
Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.43 times more return on investment than Rizal Commercial. However, Sun Life is 1.43 times more volatile than Rizal Commercial Banking. It trades about 0.05 of its potential returns per unit of risk. Rizal Commercial Banking is currently generating about 0.01 per unit of risk. If you would invest 243,135 in Sun Life Financial on August 29, 2024 and sell it today you would earn a total of 76,865 from holding Sun Life Financial or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.05% |
| Values | Daily Returns |
Sun Life Financial vs. Rizal Commercial Banking
Performance |
| Timeline |
| Sun Life Financial |
| Rizal Commercial Banking |
Sun Life and Rizal Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Rizal Commercial
The main advantage of trading using opposite Sun Life and Rizal Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Rizal Commercial 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 Rizal Commercial will offset losses from the drop in Rizal Commercial's long position.| Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp | Sun Life vs. LFM Properties Corp | Sun Life vs. PXP Energy Corp |
| Rizal Commercial vs. Allhome Corp | Rizal Commercial vs. Jollibee Foods Corp | Rizal Commercial vs. LFM Properties Corp | Rizal Commercial vs. PXP Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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