Correlation Between Tarku Resources and Manulife Dividend

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

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

Diversification Opportunities for Tarku Resources and Manulife Dividend

0.04

Correlation Coefficient

Tarku Resources  Manulife Dividend

Significant diversification

The 3 months correlation between Tarku and Manulife is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources and Manulife Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Dividend Income and Tarku Resources 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 Tarku Resources are associated (or correlated) with Manulife Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Dividend Income has no effect on the direction of Tarku Resources i.e., Tarku Resources and Manulife Dividend go up and down completely randomly.

Pair Corralation between Tarku Resources and Manulife Dividend

Assuming the 90 days horizon Tarku Resources is expected to generate 29.78 times more return on investment than Manulife Dividend. However, Tarku Resources is 29.78 times more volatile than Manulife Dividend Income. It trades about 0.08 of its potential returns per unit of risk. Manulife Dividend Income is currently generating about -0.05 per unit of risk. If you would invest  1.00  in Tarku Resources on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Tarku Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Tarku Resources  vs.  Manulife Dividend Income

Tarku Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tarku Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Dividend Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Dividend Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, Manulife Dividend is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tarku Resources and Manulife Dividend

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

The idea behind Tarku Resources and Manulife Dividend Income 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.