Correlation Between Dupont De and Manulife Financial

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

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

Diversification Opportunities for Dupont De and Manulife Financial

-0.1

Correlation Coefficient

Dupont De  Manulife Financial

Good diversification

The 3 months correlation between Dupont and Manulife is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and Dupont De 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 Dupont De Nemours 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 Corp has no effect on the direction of Dupont De i.e., Dupont De and Manulife Financial go up and down completely randomly.

Pair Corralation between Dupont De and Manulife Financial

Allowing for the 90-day total investment horizon Dupont De is expected to generate 18.8 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, Dupont De Nemours is 4.12 times less risky than Manulife Financial. It trades about 0.03 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  176,336  in Manulife Financial Corp on August 31, 2024 and sell it today you would earn a total of  18,664  from holding Manulife Financial Corp or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.18%
Values	Daily Returns

Dupont De Nemours  vs.  Manulife Financial Corp

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Manulife Financial Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Manulife Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Manulife Financial

The main advantage of trading using opposite Dupont De and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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 Dupont De Nemours and Manulife Financial Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.