Correlation Between VersaBank and Manulife Fin

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

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

Diversification Opportunities for VersaBank and Manulife Fin

-0.81

Correlation Coefficient

VersaBank  Manulife Fin

Pay attention - limited upside

The 3 months correlation between VersaBank and Manulife is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Manulife Fin Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Fin Non and VersaBank 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 VersaBank are associated (or correlated) with Manulife Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Fin Non has no effect on the direction of VersaBank i.e., VersaBank and Manulife Fin go up and down completely randomly.

Pair Corralation between VersaBank and Manulife Fin

Assuming the 90 days trading horizon VersaBank is expected to under-perform the Manulife Fin. In addition to that, VersaBank is 5.33 times more volatile than Manulife Fin Non. It trades about -0.04 of its total potential returns per unit of risk. Manulife Fin Non is currently generating about 0.08 per unit of volatility. If you would invest  2,415  in Manulife Fin Non on October 26, 2024 and sell it today you would earn a total of  60.00  from holding Manulife Fin Non or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

VersaBank  vs.  Manulife Fin Non

VersaBank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VersaBank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VersaBank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Manulife Fin Non

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Fin Non are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Manulife Fin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VersaBank and Manulife Fin

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

The idea behind VersaBank and Manulife Fin Non 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.