Correlation Between Security Bank and Manulife Financial

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

By analyzing existing cross correlation between Security Bank Corp and Manulife Financial Corp, you can compare the effects of market volatilities on Security Bank and Manulife Financial 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 Security Bank with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Manulife Financial.

Diversification Opportunities for Security Bank and Manulife Financial

0.33

Correlation Coefficient

Security Bank  Manulife Financial

Weak diversification

The 3 months correlation between Security and Manulife is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and Security Bank 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 Security Bank Corp are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Security Bank i.e., Security Bank and Manulife Financial go up and down completely randomly.

Pair Corralation between Security Bank and Manulife Financial

Assuming the 90 days trading horizon Security Bank Corp is expected to under-perform the Manulife Financial. But the stock apears to be less risky and, when comparing its historical volatility, Security Bank Corp is 2.94 times less risky than Manulife Financial. The stock trades about -0.14 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  189,900  in Manulife Financial Corp on December 3, 2024 and sell it today you would lose (4,000) from holding Manulife Financial Corp or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.63%
Values	Daily Returns

Security Bank Corp  vs.  Manulife Financial Corp

Security Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Security Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Manulife Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Security Bank and Manulife Financial

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

The idea behind Security Bank Corp and Manulife Financial Corp 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.