Correlation Between Manulife Multifactor and Manulife Smart

Can any of the company-specific risk be diversified away by investing in both Manulife Multifactor and Manulife Smart 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 Multifactor and Manulife Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Manulife Multifactor Developed and Manulife Smart International, you can compare the effects of market volatilities on Manulife Multifactor and Manulife Smart 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 Multifactor with a short position of Manulife Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and Manulife Smart.

Diversification Opportunities for Manulife Multifactor and Manulife Smart

0.33

Correlation Coefficient

Manulife Multifactor  Manulife Smart

Weak diversification

The 3 months correlation between Manulife and Manulife is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Developed and Manulife Smart International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Smart Inter and Manulife Multifactor 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 Multifactor Developed are associated (or correlated) with Manulife Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Smart Inter has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Manulife Smart go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Manulife Smart

Assuming the 90 days trading horizon Manulife Multifactor Developed is expected to generate 2.74 times more return on investment than Manulife Smart. However, Manulife Multifactor is 2.74 times more volatile than Manulife Smart International. It trades about -0.03 of its potential returns per unit of risk. Manulife Smart International is currently generating about -0.11 per unit of risk. If you would invest  3,831  in Manulife Multifactor Developed on September 2, 2024 and sell it today you would lose (56.00) from holding Manulife Multifactor Developed or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Manulife Multifactor Developed  vs.  Manulife Smart International

Manulife Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Manulife Smart Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Smart International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Manulife Smart is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Manulife Multifactor and Manulife Smart

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

The idea behind Manulife Multifactor Developed and Manulife Smart International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.