Correlation Between Pro Blend and Manning Napier

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

By analyzing existing cross correlation between Pro Blend Extended Term and Manning Napier Unconstrained, you can compare the effects of market volatilities on Pro Blend and Manning Napier 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 Pro Blend with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Blend and Manning Napier.

Diversification Opportunities for Pro Blend and Manning Napier

0.66

Correlation Coefficient

Pro Blend  Manning Napier

Poor diversification

The 3 months correlation between Pro and Manning is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Extended Term and Manning Napier Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Uncon and Pro Blend 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 Pro Blend Extended Term are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Uncon has no effect on the direction of Pro Blend i.e., Pro Blend and Manning Napier go up and down completely randomly.

Pair Corralation between Pro Blend and Manning Napier

Assuming the 90 days horizon Pro Blend Extended Term is expected to generate 2.84 times more return on investment than Manning Napier. However, Pro Blend is 2.84 times more volatile than Manning Napier Unconstrained. It trades about 0.05 of its potential returns per unit of risk. Manning Napier Unconstrained is currently generating about -0.05 per unit of risk. If you would invest  2,053  in Pro Blend Extended Term on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Pro Blend Extended Term or generate 1.17% return on investment over 90 days.

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

Pro Blend Extended Term  vs.  Manning Napier Unconstrained

Pro Blend Extended

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Extended Term are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pro Blend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Manning Napier Uncon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manning Napier Unconstrained has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Manning Napier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pro Blend and Manning Napier

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

The idea behind Pro Blend Extended Term and Manning Napier Unconstrained 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.