Correlation Between Manulife Multifactor and Purpose Tactical

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

Diversification Opportunities for Manulife Multifactor and Purpose Tactical

0.73

Correlation Coefficient

Manulife Multifactor  Purpose Tactical

Poor diversification

The 3 months correlation between Manulife and Purpose is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Developed and Purpose Tactical Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Tactical Hedged 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 Purpose Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Tactical Hedged has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Purpose Tactical go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Purpose Tactical

Assuming the 90 days trading horizon Manulife Multifactor Developed is expected to generate 1.56 times more return on investment than Purpose Tactical. However, Manulife Multifactor is 1.56 times more volatile than Purpose Tactical Hedged. It trades about 0.16 of its potential returns per unit of risk. Purpose Tactical Hedged is currently generating about 0.22 per unit of risk. If you would invest  3,612  in Manulife Multifactor Developed on September 12, 2024 and sell it today you would earn a total of  233.00  from holding Manulife Multifactor Developed or generate 6.45% return on investment over 90 days.

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

Manulife Multifactor Developed  vs.  Purpose Tactical Hedged

Manulife Multifactor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Developed are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Manulife Multifactor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Purpose Tactical Hedged

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Tactical Hedged are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Purpose Tactical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Manulife Multifactor and Purpose Tactical

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

The idea behind Manulife Multifactor Developed and Purpose Tactical Hedged 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.