Correlation Between Manulife Financial and Allhome Corp

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

Diversification Opportunities for Manulife Financial and Allhome Corp

-0.02

Correlation Coefficient

Manulife Financial  Allhome Corp

Good diversification

The 3 months correlation between Manulife and Allhome is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Allhome Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allhome Corp 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 Allhome Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allhome Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and Allhome Corp go up and down completely randomly.

Pair Corralation between Manulife Financial and Allhome Corp

Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 2.17 times more return on investment than Allhome Corp. However, Manulife Financial is 2.17 times more volatile than Allhome Corp. It trades about 0.0 of its potential returns per unit of risk. Allhome Corp is currently generating about -0.12 per unit of risk. If you would invest  168,496  in Manulife Financial Corp on December 29, 2024 and sell it today you would lose (8,496) from holding Manulife Financial Corp or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.21%
Values	Daily Returns

Manulife Financial Corp  vs.  Allhome Corp

Manulife Financial Corp

Risk-Adjusted Performance

Very Weak

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

Allhome Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allhome Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Manulife Financial and Allhome Corp

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

The idea behind Manulife Financial Corp and Allhome 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.