Correlation Between Manulife Financial and Power Group

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

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

Diversification Opportunities for Manulife Financial and Power Group

0.0

Correlation Coefficient

Manulife Financial  Power Group

Pay attention - limited upside

The 3 months correlation between Manulife and Power is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Power Group Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Group Projects and Manulife Financial 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 Financial Corp are associated (or correlated) with Power Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Group Projects has no effect on the direction of Manulife Financial i.e., Manulife Financial and Power Group go up and down completely randomly.

Pair Corralation between Manulife Financial and Power Group

If you would invest  1,672  in Manulife Financial Corp on December 21, 2024 and sell it today you would earn a total of  72.00  from holding Manulife Financial Corp or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Manulife Financial Corp  vs.  Power Group Projects

Manulife Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 4 (%) 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.

Power Group Projects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Group Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Power Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Manulife Financial and Power Group

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

The idea behind Manulife Financial Corp and Power Group Projects 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.