Correlation Between Bank of Montreal and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal 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 Bank of Montreal and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Montreal and Manulife Financial Corp, you can compare the effects of market volatilities on Bank of Montreal 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 Bank of Montreal with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Manulife Financial.
Diversification Opportunities for Bank of Montreal and Manulife Financial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Manulife is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal 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 Bank of Montreal 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 Bank of Montreal 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 Bank of Montreal i.e., Bank of Montreal and Manulife Financial go up and down completely randomly.
Pair Corralation between Bank of Montreal and Manulife Financial
Assuming the 90 days trading horizon Bank of Montreal is expected to under-perform the Manulife Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bank of Montreal is 2.57 times less risky than Manulife Financial. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,608 in Manulife Financial Corp on September 1, 2024 and sell it today you would earn a total of 52.00 from holding Manulife Financial Corp or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Montreal vs. Manulife Financial Corp
Performance |
| Timeline |
| Bank of Montreal |
| Manulife Financial Corp |
Bank of Montreal and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and Manulife Financial
The main advantage of trading using opposite Bank of Montreal and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal 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.| Bank of Montreal vs. Tree Island Steel | Bank of Montreal vs. Eddy Smart Home | Bank of Montreal vs. HOME DEPOT CDR | Bank of Montreal vs. DIRTT Environmental Solutions |
| Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Fin Non | Manulife Financial vs. Manulife Finl Srs | Manulife Financial vs. Great West Lifeco |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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