Correlation Between Walmart and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Walmart and Manulife Financial 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 Walmart and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Manulife Financial Corp, you can compare the effects of market volatilities on Walmart and Manulife Financial 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 Walmart with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Manulife Financial.
Diversification Opportunities for Walmart and Manulife Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Manulife is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and Walmart 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 Walmart are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Walmart i.e., Walmart and Manulife Financial go up and down completely randomly.
Pair Corralation between Walmart and Manulife Financial
Assuming the 90 days trading horizon Walmart is expected to generate 8.59 times more return on investment than Manulife Financial. However, Walmart is 8.59 times more volatile than Manulife Financial Corp. It trades about 0.05 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.18 per unit of risk. If you would invest 4,328 in Walmart on October 12, 2024 and sell it today you would earn a total of 1,632 from holding Walmart or generate 37.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 36.49% |
| Values | Daily Returns |
Walmart vs. Manulife Financial Corp
Performance |
| Timeline |
| Walmart |
| Manulife Financial Corp |
Walmart and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Manulife Financial
The main advantage of trading using opposite Walmart and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Manulife Financial 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 Financial will offset losses from the drop in Manulife Financial's long position.| Walmart vs. Baker Steel Resources | Walmart vs. Morgan Advanced Materials | Walmart vs. Dentsply Sirona | Walmart vs. Foresight Environmental Infrastructure |
| Manulife Financial vs. Walmart | Manulife Financial vs. BYD Co | Manulife Financial vs. Volkswagen AG | Manulife Financial vs. Volkswagen AG Non Vtg |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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