Correlation Between Sun Life and Jollibee Foods

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

Diversification Opportunities for Sun Life and Jollibee Foods

0.38

Correlation Coefficient

Sun Life  Jollibee Foods

Weak diversification

The 3 months correlation between Sun and Jollibee is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Jollibee Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods 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 Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods Corp has no effect on the direction of Sun Life i.e., Sun Life and Jollibee Foods go up and down completely randomly.

Pair Corralation between Sun Life and Jollibee Foods

Assuming the 90 days trading horizon Sun Life Financial is expected to generate 1.59 times more return on investment than Jollibee Foods. However, Sun Life is 1.59 times more volatile than Jollibee Foods Corp. It trades about 0.04 of its potential returns per unit of risk. Jollibee Foods Corp is currently generating about -0.08 per unit of risk. If you would invest  299,946  in Sun Life Financial on December 30, 2024 and sell it today you would earn a total of  15,054  from holding Sun Life Financial or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Sun Life Financial  vs.  Jollibee Foods Corp

Sun Life Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jollibee Foods Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jollibee Foods Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sun Life and Jollibee Foods

The main advantage of trading using opposite Sun Life and Jollibee Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Jollibee Foods 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 Jollibee Foods will offset losses from the drop in Jollibee Foods' long position.

The idea behind Sun Life Financial and Jollibee Foods Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.