Correlation Between Manulife Global and Manulife Dividend

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

Diversification Opportunities for Manulife Global and Manulife Dividend

0.73

Correlation Coefficient

Manulife Global  Manulife Dividend

Poor diversification

The 3 months correlation between Manulife and Manulife is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Global Equity and Manulife Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Dividend Income 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Dividend Income has no effect on the direction of Manulife Global i.e., Manulife Global and Manulife Dividend go up and down completely randomly.

Pair Corralation between Manulife Global and Manulife Dividend

Assuming the 90 days trading horizon Manulife Global Equity is expected to under-perform the Manulife Dividend. In addition to that, Manulife Global is 1.03 times more volatile than Manulife Dividend Income. It trades about -0.03 of its total potential returns per unit of risk. Manulife Dividend Income is currently generating about -0.01 per unit of volatility. If you would invest  1,475  in Manulife Dividend Income on December 29, 2024 and sell it today you would lose (8.00) from holding Manulife Dividend Income or give up 0.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Manulife Global Equity  vs.  Manulife Dividend Income

Manulife Global Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Manulife Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Manulife Dividend Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Dividend Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, Manulife Dividend is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Manulife Global and Manulife Dividend

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

The idea behind Manulife Global Equity and Manulife Dividend Income 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.