Correlation Between IShares SPTSX and Manulife Multifactor

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

By analyzing existing cross correlation between iShares SPTSX Small and Manulife Multifactor Mid, you can compare the effects of market volatilities on IShares SPTSX and Manulife Multifactor 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 IShares SPTSX with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Manulife Multifactor.

Diversification Opportunities for IShares SPTSX and Manulife Multifactor

0.76

Correlation Coefficient

IShares SPTSX  Manulife Multifactor

Poor diversification

The 3 months correlation between IShares and Manulife is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Small and Manulife Multifactor Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor Mid and IShares SPTSX 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 iShares SPTSX Small are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor Mid has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Manulife Multifactor go up and down completely randomly.

Pair Corralation between IShares SPTSX and Manulife Multifactor

Assuming the 90 days trading horizon iShares SPTSX Small is expected to generate 0.86 times more return on investment than Manulife Multifactor. However, iShares SPTSX Small is 1.16 times less risky than Manulife Multifactor. It trades about 0.21 of its potential returns per unit of risk. Manulife Multifactor Mid is currently generating about 0.16 per unit of risk. If you would invest  1,949  in iShares SPTSX Small on August 31, 2024 and sell it today you would earn a total of  220.00  from holding iShares SPTSX Small or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares SPTSX Small  vs.  Manulife Multifactor Mid

iShares SPTSX Small

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Small are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Manulife Multifactor Mid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Manulife Multifactor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IShares SPTSX and Manulife Multifactor

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

The idea behind iShares SPTSX Small and Manulife Multifactor Mid 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.