Correlation Between Manulife Financial and House Of

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

Diversification Opportunities for Manulife Financial and House Of

0.08

Correlation Coefficient

Manulife Financial  House Of

Significant diversification

The 3 months correlation between Manulife and House is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and House of Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on House of Investments 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 House Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of House of Investments has no effect on the direction of Manulife Financial i.e., Manulife Financial and House Of go up and down completely randomly.

Pair Corralation between Manulife Financial and House Of

Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.89 times more return on investment than House Of. However, Manulife Financial is 1.89 times more volatile than House of Investments. It trades about 0.02 of its potential returns per unit of risk. House of Investments is currently generating about -0.01 per unit of risk. If you would invest  189,900  in Manulife Financial Corp on December 3, 2024 and sell it today you would lose (4,000) from holding Manulife Financial Corp or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.24%
Values	Daily Returns

Manulife Financial Corp  vs.  House of Investments

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 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

House of Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days House of Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Manulife Financial and House Of

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

The idea behind Manulife Financial Corp and House of 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.