Correlation Between Tesla and Manulife Finl

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

By analyzing existing cross correlation between Tesla Inc CDR and Manulife Finl Srs, you can compare the effects of market volatilities on Tesla and Manulife Finl 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 Tesla with a short position of Manulife Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Manulife Finl.

Diversification Opportunities for Tesla and Manulife Finl

-0.58

Correlation Coefficient

Tesla  Manulife Finl

Excellent diversification

The 3 months correlation between Tesla and Manulife is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs and Tesla 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 Tesla Inc CDR are associated (or correlated) with Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of Tesla i.e., Tesla and Manulife Finl go up and down completely randomly.

Pair Corralation between Tesla and Manulife Finl

Assuming the 90 days trading horizon Tesla Inc CDR is expected to under-perform the Manulife Finl. In addition to that, Tesla is 5.3 times more volatile than Manulife Finl Srs. It trades about -0.05 of its total potential returns per unit of risk. Manulife Finl Srs is currently generating about 0.15 per unit of volatility. If you would invest  1,960  in Manulife Finl Srs on November 29, 2024 and sell it today you would earn a total of  143.00  from holding Manulife Finl Srs or generate 7.3% return on investment over 90 days.

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

Tesla Inc CDR  vs.  Manulife Finl Srs

Tesla Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Manulife Finl Srs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Finl Srs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Manulife Finl may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Tesla and Manulife Finl

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

The idea behind Tesla Inc CDR and Manulife Finl Srs 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 Global Correlations module to find global opportunities by holding instruments from different markets.