Correlation Between Manulife Fin and Manulife Financial

Can any of the company-specific risk be diversified away by investing in both Manulife Fin 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 Manulife Fin and Manulife Financial 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 Manulife Financial Corp, you can compare the effects of market volatilities on Manulife Fin 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 Manulife Fin with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Fin and Manulife Financial.

Diversification Opportunities for Manulife Fin and Manulife Financial

0.41

Correlation Coefficient

Manulife Fin  Manulife Financial

Very weak diversification

The 3 months correlation between Manulife and Manulife is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Fin Non 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 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 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 Manulife Fin i.e., Manulife Fin and Manulife Financial go up and down completely randomly.

Pair Corralation between Manulife Fin and Manulife Financial

Assuming the 90 days trading horizon Manulife Fin Non is expected to generate 0.76 times more return on investment than Manulife Financial. However, Manulife Fin Non is 1.31 times less risky than Manulife Financial. It trades about 0.36 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.21 per unit of risk. If you would invest  2,400  in Manulife Fin Non on October 10, 2024 and sell it today you would earn a total of  94.00  from holding Manulife Fin Non or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Manulife Fin Non  vs.  Manulife Financial Corp

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.

Manulife Financial Corp

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Manulife Financial 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 Fin and Manulife Financial

The main advantage of trading using opposite Manulife Fin and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Fin 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.

The idea behind Manulife Fin Non and Manulife Financial Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.