Correlation Between Manulife Financial and Network Media

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

Diversification Opportunities for Manulife Financial and Network Media

0.0

Correlation Coefficient

Manulife Financial  Network Media

Pay attention - limited upside

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

Pair Corralation between Manulife Financial and Network Media

Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.41 times more return on investment than Network Media. However, Manulife Financial Corp is 2.47 times less risky than Network Media. It trades about 0.02 of its potential returns per unit of risk. Network Media Group is currently generating about -0.01 per unit of risk. If you would invest  4,370  in Manulife Financial Corp on December 30, 2024 and sell it today you would earn a total of  36.00  from holding Manulife Financial Corp or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Manulife Financial Corp  vs.  Network Media Group

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 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.

Network Media Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Network Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Network Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Manulife Financial and Network Media

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

The idea behind Manulife Financial Corp and Network Media 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.