Correlation Between Manulife Multifactor and Global X

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

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

Diversification Opportunities for Manulife Multifactor and Global X

0.92

Correlation Coefficient

Manulife Multifactor  Global X

Almost no diversification

The 3 months correlation between Manulife and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Canadian and Global X Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Large and Manulife Multifactor 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 Multifactor Canadian are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Large has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Global X go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Global X

Assuming the 90 days trading horizon Manulife Multifactor is expected to generate 1.21 times less return on investment than Global X. But when comparing it to its historical volatility, Manulife Multifactor Canadian is 1.17 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Large is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,360  in Global X Large on September 28, 2024 and sell it today you would earn a total of  72.00  from holding Global X Large or generate 5.29% return on investment over 90 days.

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

Manulife Multifactor Canadian  vs.  Global X Large

Manulife Multifactor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Canadian are ranked lower than 10 (%) 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.

Global X Large

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Large are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Global X 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 Multifactor and Global X

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

The idea behind Manulife Multifactor Canadian and Global X Large 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.