Correlation Between Cedar Realty and Manulife Financial

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

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

Diversification Opportunities for Cedar Realty and Manulife Financial

0.4

Correlation Coefficient

Cedar Realty  Manulife Financial

Very weak diversification

The 3 months correlation between Cedar and Manulife is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial has no effect on the direction of Cedar Realty i.e., Cedar Realty and Manulife Financial go up and down completely randomly.

Pair Corralation between Cedar Realty and Manulife Financial

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 7.42 times more return on investment than Manulife Financial. However, Cedar Realty is 7.42 times more volatile than Manulife Financial. It trades about 0.06 of its potential returns per unit of risk. Manulife Financial is currently generating about 0.13 per unit of risk. If you would invest  1,195  in Cedar Realty Trust on September 13, 2024 and sell it today you would earn a total of  453.00  from holding Cedar Realty Trust or generate 37.91% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Manulife Financial

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

Manulife Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Manulife Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cedar Realty and Manulife Financial

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

The idea behind Cedar Realty Trust and Manulife Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.