Correlation Between Manulife Multifactor and TD Canadian

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

By analyzing existing cross correlation between Manulife Multifactor Large and TD Canadian Long, you can compare the effects of market volatilities on Manulife Multifactor and TD Canadian 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 TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and TD Canadian.

Diversification Opportunities for Manulife Multifactor and TD Canadian

0.23

Correlation Coefficient

Manulife Multifactor  TD Canadian

Modest diversification

The 3 months correlation between Manulife and TCLB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Large and TD Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Long 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 Large are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Long has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and TD Canadian go up and down completely randomly.

Pair Corralation between Manulife Multifactor and TD Canadian

Assuming the 90 days trading horizon Manulife Multifactor Large is expected to generate 1.12 times more return on investment than TD Canadian. However, Manulife Multifactor is 1.12 times more volatile than TD Canadian Long. It trades about 0.09 of its potential returns per unit of risk. TD Canadian Long is currently generating about 0.02 per unit of risk. If you would invest  4,893  in Manulife Multifactor Large on September 23, 2024 and sell it today you would earn a total of  414.00  from holding Manulife Multifactor Large or generate 8.46% return on investment over 90 days.

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

Manulife Multifactor Large  vs.  TD Canadian Long

Manulife Multifactor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Large are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

TD Canadian Long

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Manulife Multifactor and TD Canadian

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

The idea behind Manulife Multifactor Large and TD Canadian Long 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.