Correlation Between Sun Life and Globalfoundries

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

Diversification Opportunities for Sun Life and Globalfoundries

0.33

Correlation Coefficient

Sun Life  Globalfoundries

Weak diversification

The 3 months correlation between Sun and Globalfoundries is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Sun Life i.e., Sun Life and Globalfoundries go up and down completely randomly.

Pair Corralation between Sun Life and Globalfoundries

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.47 times more return on investment than Globalfoundries. However, Sun Life Financial is 2.14 times less risky than Globalfoundries. It trades about -0.04 of its potential returns per unit of risk. Globalfoundries is currently generating about -0.08 per unit of risk. If you would invest  5,867  in Sun Life Financial on December 29, 2024 and sell it today you would lose (203.00) from holding Sun Life Financial or give up 3.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sun Life Financial  vs.  Globalfoundries

Sun Life Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sun Life and Globalfoundries

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

The idea behind Sun Life Financial and Globalfoundries 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.