Correlation Between Converge Information and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Converge Information 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 Converge Information and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Information Communications and Manulife Financial Corp, you can compare the effects of market volatilities on Converge Information 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 Converge Information with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and Manulife Financial.
Diversification Opportunities for Converge Information and Manulife Financial
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Converge and Manulife is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica 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 Converge Information 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 Converge Information Communications 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 Converge Information i.e., Converge Information and Manulife Financial go up and down completely randomly.
Pair Corralation between Converge Information and Manulife Financial
Assuming the 90 days trading horizon Converge Information is expected to generate 12.68 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, Converge Information Communications is 3.14 times less risky than Manulife Financial. It trades about 0.03 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 176,237 in Manulife Financial Corp on September 13, 2024 and sell it today you would earn a total of 13,663 from holding Manulife Financial Corp or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Converge Information Communica vs. Manulife Financial Corp
Performance |
| Timeline |
| Converge Information |
| Manulife Financial Corp |
Converge Information and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Information and Manulife Financial
The main advantage of trading using opposite Converge Information and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information 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.| Converge Information vs. Transpacific Broadband Group | Converge Information vs. GT Capital Holdings | Converge Information vs. Allhome Corp | Converge Information vs. Jollibee Foods Corp |
| Manulife Financial vs. Sun Life Financial | Manulife Financial vs. National Reinsurance | Manulife Financial vs. GT Capital Holdings | Manulife Financial vs. Allhome Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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