Correlation Between IShares Canadian and Manulife Dividend

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

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

Diversification Opportunities for IShares Canadian and Manulife Dividend

-0.07

Correlation Coefficient

IShares Canadian  Manulife Dividend

Good diversification

The 3 months correlation between IShares and Manulife is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid 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 IShares Canadian 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 Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Manulife Dividend go up and down completely randomly.

Pair Corralation between IShares Canadian and Manulife Dividend

Assuming the 90 days trading horizon IShares Canadian is expected to generate 103.67 times less return on investment than Manulife Dividend. But when comparing it to its historical volatility, iShares Canadian HYBrid is 2.09 times less risky than Manulife Dividend. It trades about 0.0 of its potential returns per unit of risk. Manulife Dividend Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,498  in Manulife Dividend Income on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Manulife Dividend Income or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

iShares Canadian HYBrid  vs.  Manulife Dividend Income

iShares Canadian HYBrid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Manulife Dividend Income

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Fund's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with IShares Canadian and Manulife Dividend

The main advantage of trading using opposite IShares Canadian and Manulife Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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 iShares Canadian HYBrid 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.