Correlation Between House Of and Manulife Financial

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

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

Diversification Opportunities for House Of and Manulife Financial

0.12

Correlation Coefficient

House Of  Manulife Financial

Average diversification

The 3 months correlation between House and Manulife is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments 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 House Of 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 House of Investments 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 House Of i.e., House Of and Manulife Financial go up and down completely randomly.

Pair Corralation between House Of and Manulife Financial

Assuming the 90 days trading horizon House Of is expected to generate 11.19 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, House of Investments is 3.59 times less risky than Manulife Financial. It trades about 0.05 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  146,616  in Manulife Financial Corp on September 13, 2024 and sell it today you would earn a total of  43,284  from holding Manulife Financial Corp or generate 29.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.87%
Values	Daily Returns

House of Investments  vs.  Manulife Financial Corp

House of Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in House of Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Manulife Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 11 (%) 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 House Of and Manulife Financial

The main advantage of trading using opposite House Of and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if House Of 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 House of Investments 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.