Correlation Between Manulife Financial and Themac Resources

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

Diversification Opportunities for Manulife Financial and Themac Resources

0.58

Correlation Coefficient

Manulife Financial  Themac Resources

Very weak diversification

The 3 months correlation between Manulife and Themac is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Manulife Financial i.e., Manulife Financial and Themac Resources go up and down completely randomly.

Pair Corralation between Manulife Financial and Themac Resources

Assuming the 90 days trading horizon Manulife Financial is expected to generate 8.04 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Manulife Financial Corp is 10.47 times less risky than Themac Resources. It trades about 0.2 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Themac Resources Group on October 26, 2024 and sell it today you would earn a total of  2.50  from holding Themac Resources Group or generate 100.0% return on investment over 90 days.

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

Manulife Financial Corp  vs.  Themac Resources Group

Manulife Financial Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Manulife Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Themac Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Financial and Themac Resources

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

The idea behind Manulife Financial Corp and Themac Resources Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.