Correlation Between Basic Energy and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Basic Energy 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 Basic Energy and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Energy Corp and Manulife Financial Corp, you can compare the effects of market volatilities on Basic Energy 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 Basic Energy with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Energy and Manulife Financial.
Diversification Opportunities for Basic Energy and Manulife Financial
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Basic and Manulife is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Basic Energy Corp 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 Basic Energy 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 Basic Energy Corp 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 Basic Energy i.e., Basic Energy and Manulife Financial go up and down completely randomly.
Pair Corralation between Basic Energy and Manulife Financial
Assuming the 90 days trading horizon Basic Energy Corp is expected to under-perform the Manulife Financial. But the stock apears to be less risky and, when comparing its historical volatility, Basic Energy Corp is 1.95 times less risky than Manulife Financial. The stock trades about -0.04 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 85,219 in Manulife Financial Corp on September 5, 2024 and sell it today you would earn a total of 104,681 from holding Manulife Financial Corp or generate 122.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 61.88% |
| Values | Daily Returns |
Basic Energy Corp vs. Manulife Financial Corp
Performance |
| Timeline |
| Basic Energy Corp |
| Manulife Financial Corp |
Basic Energy and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basic Energy and Manulife Financial
The main advantage of trading using opposite Basic Energy and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Energy 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.| Basic Energy vs. Manulife Financial Corp | Basic Energy vs. Philex Mining Corp | Basic Energy vs. Allhome Corp | Basic Energy vs. Apex Mining Co |
| Manulife Financial vs. Converge Information Communications | Manulife Financial vs. Rizal Commercial Banking | Manulife Financial vs. Jollibee Foods Corp | Manulife Financial vs. Metropolitan Bank Trust |
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 CEOs Directory module to screen CEOs from public companies around the world.
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