Correlation Between Manulife Financial and FuelPositive Corp

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

Diversification Opportunities for Manulife Financial and FuelPositive Corp

-0.35

Correlation Coefficient

Manulife Financial  FuelPositive Corp

Very good diversification

The 3 months correlation between Manulife and FuelPositive is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and FuelPositive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelPositive 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 FuelPositive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelPositive Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and FuelPositive Corp go up and down completely randomly.

Pair Corralation between Manulife Financial and FuelPositive Corp

Assuming the 90 days trading horizon Manulife Financial is expected to generate 10.12 times less return on investment than FuelPositive Corp. But when comparing it to its historical volatility, Manulife Financial Corp is 4.13 times less risky than FuelPositive Corp. It trades about 0.03 of its potential returns per unit of risk. FuelPositive Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.00  in FuelPositive Corp on December 25, 2024 and sell it today you would earn a total of  0.50  from holding FuelPositive Corp or generate 16.67% return on investment over 90 days.

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

Manulife Financial Corp  vs.  FuelPositive Corp

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 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Manulife Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FuelPositive Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FuelPositive Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, FuelPositive Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Financial and FuelPositive Corp

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

The idea behind Manulife Financial Corp and FuelPositive 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.