Correlation Between Manulife Finl and WildBrain

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

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

Diversification Opportunities for Manulife Finl and WildBrain

0.64

Correlation Coefficient

Manulife Finl  WildBrain

Poor diversification

The 3 months correlation between Manulife and WildBrain is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Finl Srs and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain and Manulife Finl 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 Finl Srs are associated (or correlated) with WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of Manulife Finl i.e., Manulife Finl and WildBrain go up and down completely randomly.

Pair Corralation between Manulife Finl and WildBrain

Assuming the 90 days trading horizon Manulife Finl is expected to generate 3.86 times less return on investment than WildBrain. But when comparing it to its historical volatility, Manulife Finl Srs is 2.75 times less risky than WildBrain. It trades about 0.08 of its potential returns per unit of risk. WildBrain is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  163.00  in WildBrain on December 30, 2024 and sell it today you would earn a total of  24.00  from holding WildBrain or generate 14.72% return on investment over 90 days.

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

Manulife Finl Srs  vs.  WildBrain

Manulife Finl Srs

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Finl Srs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Manulife Finl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

WildBrain

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WildBrain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, WildBrain displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Finl and WildBrain

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

The idea behind Manulife Finl Srs and WildBrain 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.