Correlation Between Manulife Multifactor and Purpose Floating

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

Diversification Opportunities for Manulife Multifactor and Purpose Floating

0.78

Correlation Coefficient

Manulife Multifactor  Purpose Floating

Poor diversification

The 3 months correlation between Manulife and Purpose is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Mid and Purpose Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Floating Rate 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 Purpose Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Floating Rate has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Purpose Floating go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Purpose Floating

Assuming the 90 days trading horizon Manulife Multifactor Mid is expected to under-perform the Purpose Floating. But the etf apears to be less risky and, when comparing its historical volatility, Manulife Multifactor Mid is 1.34 times less risky than Purpose Floating. The etf trades about -0.26 of its potential returns per unit of risk. The Purpose Floating Rate is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  612.00  in Purpose Floating Rate on September 26, 2024 and sell it today you would earn a total of  12.00  from holding Purpose Floating Rate or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Manulife Multifactor Mid  vs.  Purpose Floating Rate

Manulife Multifactor Mid

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 3 (%) 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.

Purpose Floating Rate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Floating Rate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Purpose Floating is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Manulife Multifactor and Purpose Floating

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

The idea behind Manulife Multifactor Mid and Purpose Floating Rate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.