Correlation Between Manulife Financial and Vitalhub Corp

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

Diversification Opportunities for Manulife Financial and Vitalhub Corp

0.39

Correlation Coefficient

Manulife Financial  Vitalhub Corp

Weak diversification

The 3 months correlation between Manulife and Vitalhub is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Vitalhub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitalhub 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 Vitalhub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitalhub Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and Vitalhub Corp go up and down completely randomly.

Pair Corralation between Manulife Financial and Vitalhub Corp

Assuming the 90 days trading horizon Manulife Financial is expected to generate 3.69 times less return on investment than Vitalhub Corp. But when comparing it to its historical volatility, Manulife Financial Corp is 2.11 times less risky than Vitalhub Corp. It trades about 0.09 of its potential returns per unit of risk. Vitalhub Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  935.00  in Vitalhub Corp on October 25, 2024 and sell it today you would earn a total of  235.00  from holding Vitalhub Corp or generate 25.13% return on investment over 90 days.

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

Manulife Financial Corp  vs.  Vitalhub Corp

Manulife Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 6 (%) 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.

Vitalhub Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitalhub Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Vitalhub Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Financial and Vitalhub Corp

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

The idea behind Manulife Financial Corp and Vitalhub 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.