Correlation Between Hamilton Enhanced and Manulife Multifactor

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

By analyzing existing cross correlation between Hamilton Enhanced Canadian and Manulife Multifactor Mid, you can compare the effects of market volatilities on Hamilton Enhanced and Manulife Multifactor 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 Hamilton Enhanced with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and Manulife Multifactor.

Diversification Opportunities for Hamilton Enhanced and Manulife Multifactor

0.56

Correlation Coefficient

Hamilton Enhanced  Manulife Multifactor

Very weak diversification

The 3 months correlation between Hamilton and Manulife is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and Manulife Multifactor Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor Mid and Hamilton Enhanced 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 Hamilton Enhanced Canadian are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor Mid has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Manulife Multifactor go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Manulife Multifactor

Assuming the 90 days trading horizon Hamilton Enhanced Canadian is expected to generate 0.58 times more return on investment than Manulife Multifactor. However, Hamilton Enhanced Canadian is 1.71 times less risky than Manulife Multifactor. It trades about 0.15 of its potential returns per unit of risk. Manulife Multifactor Mid is currently generating about -0.12 per unit of risk. If you would invest  2,427  in Hamilton Enhanced Canadian on October 7, 2024 and sell it today you would earn a total of  71.00  from holding Hamilton Enhanced Canadian or generate 2.93% return on investment over 90 days.

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

Hamilton Enhanced Canadian  vs.  Manulife Multifactor Mid

Hamilton Enhanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hamilton Enhanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Manulife Multifactor Mid

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Manulife Multifactor is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hamilton Enhanced and Manulife Multifactor

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

The idea behind Hamilton Enhanced Canadian and Manulife Multifactor Mid 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.