Correlation Between Manulife Financial and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and DXC Technology 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 Manulife Financial and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Financial Corp and DXC Technology Co, you can compare the effects of market volatilities on Manulife Financial and DXC Technology 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 Manulife Financial with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and DXC Technology.
Diversification Opportunities for Manulife Financial and DXC Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Manulife and DXC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Manulife Financial 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 Manulife Financial Corp are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Manulife Financial i.e., Manulife Financial and DXC Technology go up and down completely randomly.
Pair Corralation between Manulife Financial and DXC Technology
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.74 times more return on investment than DXC Technology. However, Manulife Financial Corp is 1.35 times less risky than DXC Technology. It trades about 0.07 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.01 per unit of risk. If you would invest 4,362 in Manulife Financial Corp on October 24, 2024 and sell it today you would earn a total of 34.00 from holding Manulife Financial Corp or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 40.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. DXC Technology Co
Performance |
| Timeline |
| Manulife Financial Corp |
| DXC Technology |
Manulife Financial and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and DXC Technology
The main advantage of trading using opposite Manulife Financial and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Manulife Financial vs. Electronic Arts | Manulife Financial vs. SMA Solar Technology | Manulife Financial vs. European Metals Holdings | Manulife Financial vs. Sovereign Metals |
| DXC Technology vs. Ross Stores | DXC Technology vs. Blackrock World Mining | DXC Technology vs. Qurate Retail Series | DXC Technology vs. URU Metals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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