Correlation Between Suntrust Home and Manulife Financial

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

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

Diversification Opportunities for Suntrust Home and Manulife Financial

0.07

Correlation Coefficient

Suntrust Home  Manulife Financial

Significant diversification

The 3 months correlation between Suntrust and Manulife is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Suntrust Home Developers 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 Suntrust Home 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 Suntrust Home Developers 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 Suntrust Home i.e., Suntrust Home and Manulife Financial go up and down completely randomly.

Pair Corralation between Suntrust Home and Manulife Financial

Assuming the 90 days trading horizon Suntrust Home is expected to generate 7.59 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, Suntrust Home Developers is 2.01 times less risky than Manulife Financial. It trades about 0.05 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  131,360  in Manulife Financial Corp on September 5, 2024 and sell it today you would earn a total of  58,540  from holding Manulife Financial Corp or generate 44.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.45%
Values	Daily Returns

Suntrust Home Developers  vs.  Manulife Financial Corp

Suntrust Home Developers

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Suntrust Home may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Manulife Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Manulife Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suntrust Home and Manulife Financial

The main advantage of trading using opposite Suntrust Home and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntrust Home 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 Suntrust Home Developers 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.

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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.