Correlation Between Sun Life and Del Monte

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

Diversification Opportunities for Sun Life and Del Monte

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sun and Del is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Del Monte Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Del Monte Pacific 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 Del Monte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Del Monte Pacific has no effect on the direction of Sun Life i.e., Sun Life and Del Monte go up and down completely randomly.

Pair Corralation between Sun Life and Del Monte

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.69 times more return on investment than Del Monte. However, Sun Life is 1.69 times more volatile than Del Monte Pacific. It trades about 0.12 of its potential returns per unit of risk. Del Monte Pacific is currently generating about -0.11 per unit of risk. If you would invest  296,978  in Sun Life Financial on September 26, 2024 and sell it today you would earn a total of  53,022  from holding Sun Life Financial or generate 17.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.75%
ValuesDaily Returns

Sun Life Financial  vs.  Del Monte Pacific

 Performance 
       Timeline  
Sun Life Financial 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sun Life exhibited solid returns over the last few months and may actually be approaching a breakup point.
Del Monte Pacific 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Del Monte Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sun Life and Del Monte Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sun Life and Del Monte

The main advantage of trading using opposite Sun Life and Del Monte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Del Monte 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 Del Monte will offset losses from the drop in Del Monte's long position.
The idea behind Sun Life Financial and Del Monte Pacific 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.
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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