Correlation Between Manulife Smart and Manulife Multifactor

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

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

Diversification Opportunities for Manulife Smart and Manulife Multifactor

0.69

Correlation Coefficient

Manulife Smart  Manulife Multifactor

Poor diversification

The 3 months correlation between Manulife and Manulife is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Smart International and Manulife Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and Manulife Smart 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 Manulife Smart International 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 has no effect on the direction of Manulife Smart i.e., Manulife Smart and Manulife Multifactor go up and down completely randomly.

Pair Corralation between Manulife Smart and Manulife Multifactor

Assuming the 90 days trading horizon Manulife Smart International is expected to under-perform the Manulife Multifactor. But the etf apears to be less risky and, when comparing its historical volatility, Manulife Smart International is 2.99 times less risky than Manulife Multifactor. The etf trades about -0.11 of its potential returns per unit of risk. The Manulife Multifactor Developed is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,411  in Manulife Multifactor Developed on September 2, 2024 and sell it today you would lose (48.00) from holding Manulife Multifactor Developed or give up 1.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Manulife Smart International  vs.  Manulife Multifactor Developed

Manulife Smart Inter

Risk-Adjusted Performance

0 of 100

Very Weak

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

Manulife Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Manulife Smart and Manulife Multifactor

The main advantage of trading using opposite Manulife Smart and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Smart 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 Manulife Smart International and Manulife Multifactor Developed 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.