Correlation Between European Residential and Manulife Dividend

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

By analyzing existing cross correlation between European Residential Real and Manulife Dividend Income, you can compare the effects of market volatilities on European Residential 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 European Residential with a short position of Manulife Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Manulife Dividend.

Diversification Opportunities for European Residential and Manulife Dividend

0.69

Correlation Coefficient

European Residential  Manulife Dividend

Poor diversification

The 3 months correlation between European and Manulife is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real 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 European Residential 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 European Residential Real 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 European Residential i.e., European Residential and Manulife Dividend go up and down completely randomly.

Pair Corralation between European Residential and Manulife Dividend

Assuming the 90 days trading horizon European Residential Real is expected to under-perform the Manulife Dividend. In addition to that, European Residential is 7.77 times more volatile than Manulife Dividend Income. It trades about -0.09 of its total potential returns per unit of risk. Manulife Dividend Income is currently generating about -0.02 per unit of volatility. If you would invest  1,491  in Manulife Dividend Income on December 27, 2024 and sell it today you would lose (17.00) from holding Manulife Dividend Income or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

European Residential Real  vs.  Manulife Dividend Income

European Residential Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with European Residential and Manulife Dividend

The main advantage of trading using opposite European Residential and Manulife Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential 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 European Residential Real 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 Stocks Directory module to find actively traded stocks across global markets.