Correlation Between Manulife Financial and Sprott Physical

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

Diversification Opportunities for Manulife Financial and Sprott Physical

-0.67

Correlation Coefficient

Manulife Financial  Sprott Physical

Excellent diversification

The 3 months correlation between Manulife and Sprott is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Sprott Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Silver 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Silver has no effect on the direction of Manulife Financial i.e., Manulife Financial and Sprott Physical go up and down completely randomly.

Pair Corralation between Manulife Financial and Sprott Physical

Assuming the 90 days trading horizon Manulife Financial is expected to generate 7.4 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Manulife Financial Corp is 1.19 times less risky than Sprott Physical. It trades about 0.03 of its potential returns per unit of risk. Sprott Physical Silver is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Sprott Physical Silver on October 24, 2024 and sell it today you would earn a total of  57.00  from holding Sprott Physical Silver or generate 4.0% return on investment over 90 days.

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

Manulife Financial Corp  vs.  Sprott Physical Silver

Manulife Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sprott Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Manulife Financial and Sprott Physical

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

The idea behind Manulife Financial Corp and Sprott Physical Silver 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.