Correlation Between IA Financial and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both IA Financial 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 IA Financial and Manulife Financial 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 Financial Corp, you can compare the effects of market volatilities on IA Financial 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 IA Financial with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Manulife Financial.
Diversification Opportunities for IA Financial and Manulife Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IAG and Manulife is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial 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 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 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 IA Financial i.e., IA Financial and Manulife Financial go up and down completely randomly.
Pair Corralation between IA Financial and Manulife Financial
Assuming the 90 days trading horizon iA Financial is expected to generate 0.93 times more return on investment than Manulife Financial. However, iA Financial is 1.07 times less risky than Manulife Financial. It trades about 0.08 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.07 per unit of risk. If you would invest 13,141 in iA Financial on September 25, 2024 and sell it today you would earn a total of 198.00 from holding iA Financial or generate 1.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iA Financial vs. Manulife Financial Corp
Performance |
Timeline |
iA Financial |
Manulife Financial Corp |
IA Financial and Manulife Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IA Financial and Manulife Financial
The main advantage of trading using opposite IA Financial and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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.IA Financial vs. Manulife Financial Corp | IA Financial vs. Great West Lifeco | IA Financial vs. National Bank of | IA Financial vs. Canadian Imperial Bank |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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