Correlation Between Manulife Financial and Power Of

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

By analyzing existing cross correlation between Manulife Financial and Power of, you can compare the effects of market volatilities on Manulife Financial and Power Of 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 Power Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Power Of.

Diversification Opportunities for Manulife Financial and Power Of

0.64

Correlation Coefficient

Manulife Financial  Power Of

Poor diversification

The 3 months correlation between Manulife and Power is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Of 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 are associated (or correlated) with Power Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Of has no effect on the direction of Manulife Financial i.e., Manulife Financial and Power Of go up and down completely randomly.

Pair Corralation between Manulife Financial and Power Of

Assuming the 90 days horizon Manulife Financial is expected to generate 4.48 times less return on investment than Power Of. But when comparing it to its historical volatility, Manulife Financial is 4.59 times less risky than Power Of. It trades about 0.13 of its potential returns per unit of risk. Power of is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,058  in Power of on September 13, 2024 and sell it today you would earn a total of  228.00  from holding Power of or generate 7.46% return on investment over 90 days.

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

Manulife Financial  vs.  Power of

Manulife Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Manulife Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Of

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Power Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Manulife Financial and Power Of

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

The idea behind Manulife Financial and Power of 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.