Correlation Between IA Financial and Manulife Finl

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

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

Diversification Opportunities for IA Financial and Manulife Finl

-0.67

Correlation Coefficient

IA Financial  Manulife Finl

Excellent diversification

The 3 months correlation between IAG and Manulife is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs and IA Financial 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 iA Financial are associated (or correlated) with Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of IA Financial i.e., IA Financial and Manulife Finl go up and down completely randomly.

Pair Corralation between IA Financial and Manulife Finl

Assuming the 90 days trading horizon iA Financial is expected to generate 1.75 times more return on investment than Manulife Finl. However, IA Financial is 1.75 times more volatile than Manulife Finl Srs. It trades about 0.09 of its potential returns per unit of risk. Manulife Finl Srs is currently generating about 0.04 per unit of risk. If you would invest  7,587  in iA Financial on September 26, 2024 and sell it today you would earn a total of  5,677  from holding iA Financial or generate 74.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

iA Financial  vs.  Manulife Finl Srs

iA Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IA Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Finl Srs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Finl Srs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Finl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IA Financial and Manulife Finl

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

The idea behind iA Financial and Manulife Finl Srs 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..