Correlation Between NBI Sustainable and Manulife Multifactor

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

By analyzing existing cross correlation between NBI Sustainable Canadian and Manulife Multifactor Mid, you can compare the effects of market volatilities on NBI Sustainable and Manulife Multifactor 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 NBI Sustainable with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Sustainable and Manulife Multifactor.

Diversification Opportunities for NBI Sustainable and Manulife Multifactor

0.91

Correlation Coefficient

NBI Sustainable  Manulife Multifactor

Almost no diversification

The 3 months correlation between NBI and Manulife is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NBI Sustainable Canadian and Manulife Multifactor Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor Mid and NBI Sustainable 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 NBI Sustainable Canadian are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor Mid has no effect on the direction of NBI Sustainable i.e., NBI Sustainable and Manulife Multifactor go up and down completely randomly.

Pair Corralation between NBI Sustainable and Manulife Multifactor

Assuming the 90 days trading horizon NBI Sustainable Canadian is expected to generate 0.64 times more return on investment than Manulife Multifactor. However, NBI Sustainable Canadian is 1.57 times less risky than Manulife Multifactor. It trades about 0.11 of its potential returns per unit of risk. Manulife Multifactor Mid is currently generating about 0.06 per unit of risk. If you would invest  3,179  in NBI Sustainable Canadian on September 23, 2024 and sell it today you would earn a total of  1,179  from holding NBI Sustainable Canadian or generate 37.09% return on investment over 90 days.

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

NBI Sustainable Canadian  vs.  Manulife Multifactor Mid

NBI Sustainable Canadian

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Sustainable Canadian are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Sustainable is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Manulife Multifactor Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Multifactor Mid has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with NBI Sustainable and Manulife Multifactor

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

The idea behind NBI Sustainable Canadian and Manulife Multifactor Mid 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.