Correlation Between Manulife Global and Manulife All

Can any of the company-specific risk be diversified away by investing in both Manulife Global and Manulife All 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 Manulife Global and Manulife All into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Manulife Global Equity and Manulife All Cap, you can compare the effects of market volatilities on Manulife Global and Manulife All 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 Manulife Global with a short position of Manulife All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Global and Manulife All.

Diversification Opportunities for Manulife Global and Manulife All

0.72

Correlation Coefficient

Manulife Global  Manulife All

Poor diversification

The 3 months correlation between Manulife and Manulife is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Global Equity and Manulife All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife All Cap and Manulife Global 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 Manulife Global Equity are associated (or correlated) with Manulife All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife All Cap has no effect on the direction of Manulife Global i.e., Manulife Global and Manulife All go up and down completely randomly.

Pair Corralation between Manulife Global and Manulife All

Assuming the 90 days trading horizon Manulife Global Equity is expected to under-perform the Manulife All. But the fund apears to be less risky and, when comparing its historical volatility, Manulife Global Equity is 1.93 times less risky than Manulife All. The fund trades about -0.02 of its potential returns per unit of risk. The Manulife All Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,650  in Manulife All Cap on October 24, 2024 and sell it today you would earn a total of  21.00  from holding Manulife All Cap or generate 0.37% return on investment over 90 days.

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

Manulife Global Equity  vs.  Manulife All Cap

Manulife Global Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Global Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Manulife Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Manulife All Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife All Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Manulife All is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Manulife Global and Manulife All

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

The idea behind Manulife Global Equity and Manulife All Cap 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.