Correlation Between Manulife Multifactor and Brompton Global

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

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

Diversification Opportunities for Manulife Multifactor and Brompton Global

0.94

Correlation Coefficient

Manulife Multifactor  Brompton Global

Almost no diversification

The 3 months correlation between Manulife and Brompton is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Mid and Brompton Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Global Dividend 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 Mid are associated (or correlated) with Brompton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Global Dividend has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Brompton Global go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Brompton Global

Assuming the 90 days trading horizon Manulife Multifactor Mid is expected to generate 1.17 times more return on investment than Brompton Global. However, Manulife Multifactor is 1.17 times more volatile than Brompton Global Dividend. It trades about 0.27 of its potential returns per unit of risk. Brompton Global Dividend is currently generating about 0.15 per unit of risk. If you would invest  4,770  in Manulife Multifactor Mid on September 3, 2024 and sell it today you would earn a total of  754.00  from holding Manulife Multifactor Mid or generate 15.81% return on investment over 90 days.

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

Manulife Multifactor Mid  vs.  Brompton Global Dividend

Manulife Multifactor Mid

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Manulife Multifactor sustained solid returns over the last few months and may actually be approaching a breakup point.

Brompton Global Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Global Dividend are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Manulife Multifactor and Brompton Global

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

The idea behind Manulife Multifactor Mid and Brompton Global Dividend 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.