Correlation Between Manulife Global and TD Comfort

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

Diversification Opportunities for Manulife Global and TD Comfort

0.76

Correlation Coefficient

Manulife Global  TD Comfort

Poor diversification

The 3 months correlation between Manulife and 0P0001FAU5 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Global Equity and TD Comfort Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Comfort Aggressive 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 TD Comfort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Comfort Aggressive has no effect on the direction of Manulife Global i.e., Manulife Global and TD Comfort go up and down completely randomly.

Pair Corralation between Manulife Global and TD Comfort

Assuming the 90 days trading horizon Manulife Global Equity is expected to generate 0.94 times more return on investment than TD Comfort. However, Manulife Global Equity is 1.07 times less risky than TD Comfort. It trades about -0.03 of its potential returns per unit of risk. TD Comfort Aggressive is currently generating about -0.03 per unit of risk. If you would invest  4,341  in Manulife Global Equity on December 29, 2024 and sell it today you would lose (57.00) from holding Manulife Global Equity or give up 1.31% of portfolio value over 90 days.

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

Manulife Global Equity  vs.  TD Comfort Aggressive

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.

TD Comfort Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Comfort Aggressive has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, TD Comfort is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Manulife Global and TD Comfort

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

The idea behind Manulife Global Equity and TD Comfort Aggressive 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.