Correlation Between Manulife Financial and Commerce Split

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

Diversification Opportunities for Manulife Financial and Commerce Split

0.41

Correlation Coefficient

Manulife Financial  Commerce Split

Very weak diversification

The 3 months correlation between Manulife and Commerce is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Commerce Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Split 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 Commerce Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Split Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and Commerce Split go up and down completely randomly.

Pair Corralation between Manulife Financial and Commerce Split

Assuming the 90 days trading horizon Manulife Financial is expected to generate 1.31 times less return on investment than Commerce Split. But when comparing it to its historical volatility, Manulife Financial Corp is 1.62 times less risky than Commerce Split. It trades about 0.1 of its potential returns per unit of risk. Commerce Split Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  444.00  in Commerce Split Corp on October 10, 2024 and sell it today you would earn a total of  38.00  from holding Commerce Split Corp or generate 8.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Manulife Financial Corp  vs.  Commerce Split Corp

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.

Commerce Split Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Split Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Commerce Split may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Manulife Financial and Commerce Split

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

The idea behind Manulife Financial Corp and Commerce Split 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.