Correlation Between Diversified Royalty and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Diversified Royalty 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 Diversified Royalty and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Royalty Corp and Manulife Financial Corp, you can compare the effects of market volatilities on Diversified Royalty 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 Diversified Royalty with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Royalty and Manulife Financial.
Diversification Opportunities for Diversified Royalty and Manulife Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diversified and Manulife is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Royalty 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 Diversified Royalty 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 Diversified Royalty 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 Diversified Royalty i.e., Diversified Royalty and Manulife Financial go up and down completely randomly.
Pair Corralation between Diversified Royalty and Manulife Financial
Assuming the 90 days trading horizon Diversified Royalty Corp is expected to under-perform the Manulife Financial. But the stock apears to be less risky and, when comparing its historical volatility, Diversified Royalty Corp is 1.42 times less risky than Manulife Financial. The stock trades about -0.16 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,697 in Manulife Financial Corp on October 30, 2024 and sell it today you would earn a total of 183.00 from holding Manulife Financial Corp or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Royalty Corp vs. Manulife Financial Corp
Performance |
| Timeline |
| Diversified Royalty Corp |
| Manulife Financial Corp |
Diversified Royalty and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Royalty and Manulife Financial
The main advantage of trading using opposite Diversified Royalty and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Royalty 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.| Diversified Royalty vs. True North Commercial | Diversified Royalty vs. Chemtrade Logistics Income | Diversified Royalty vs. Pizza Pizza Royalty | Diversified Royalty vs. Exchange Income |
| Manulife Financial vs. Homerun Resources | Manulife Financial vs. Advent Wireless | Manulife Financial vs. Converge Technology Solutions | Manulife Financial vs. Rogers Communications |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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