Correlation Between Manulife Smart and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both Manulife Smart and BMO Canadian 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 Smart and BMO Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Smart Dividend and BMO Canadian High, you can compare the effects of market volatilities on Manulife Smart and BMO Canadian 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 Smart with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Smart and BMO Canadian.
Diversification Opportunities for Manulife Smart and BMO Canadian
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Manulife and BMO is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Smart Dividend and BMO Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian High and Manulife Smart 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 Smart Dividend are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian High has no effect on the direction of Manulife Smart i.e., Manulife Smart and BMO Canadian go up and down completely randomly.
Pair Corralation between Manulife Smart and BMO Canadian
Assuming the 90 days trading horizon Manulife Smart Dividend is expected to generate 1.26 times more return on investment than BMO Canadian. However, Manulife Smart is 1.26 times more volatile than BMO Canadian High. It trades about 0.11 of its potential returns per unit of risk. BMO Canadian High is currently generating about 0.14 per unit of risk. If you would invest 1,510 in Manulife Smart Dividend on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Manulife Smart Dividend or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Manulife Smart Dividend vs. BMO Canadian High
Performance |
| Timeline |
| Manulife Smart Dividend |
| BMO Canadian High |
Manulife Smart and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Smart and BMO Canadian
The main advantage of trading using opposite Manulife Smart and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Smart position performs unexpectedly, BMO Canadian 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 BMO Canadian will offset losses from the drop in BMO Canadian's long position.| Manulife Smart vs. iShares Diversified Monthly | Manulife Smart vs. iShares SPTSX Capped | Manulife Smart vs. iShares SPTSX Capped |
| BMO Canadian vs. iShares Diversified Monthly | BMO Canadian vs. iShares SPTSX Capped | BMO Canadian vs. iShares SPTSX Capped |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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