Correlation Between Manulife Fin and Canadian General

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

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

Diversification Opportunities for Manulife Fin and Canadian General

-0.13

Correlation Coefficient

Manulife Fin  Canadian General

Good diversification

The 3 months correlation between Manulife and Canadian is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Fin Non and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Manulife Fin 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 Fin Non are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Manulife Fin i.e., Manulife Fin and Canadian General go up and down completely randomly.

Pair Corralation between Manulife Fin and Canadian General

Assuming the 90 days trading horizon Manulife Fin Non is expected to generate 0.71 times more return on investment than Canadian General. However, Manulife Fin Non is 1.42 times less risky than Canadian General. It trades about 0.13 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.07 per unit of risk. If you would invest  1,832  in Manulife Fin Non on October 27, 2024 and sell it today you would earn a total of  656.00  from holding Manulife Fin Non or generate 35.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Manulife Fin Non  vs.  Canadian General Investments

Manulife Fin Non

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Fin Non are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Manulife Fin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Canadian General Inv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Manulife Fin and Canadian General

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

The idea behind Manulife Fin Non and Canadian General Investments 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.