Correlation Between Desjardins and Manulife Smart
Can any of the company-specific risk be diversified away by investing in both Desjardins and Manulife Smart 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 Desjardins and Manulife Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins RI Global and Manulife Smart Dividend, you can compare the effects of market volatilities on Desjardins and Manulife Smart 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 Desjardins with a short position of Manulife Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Manulife Smart.
Diversification Opportunities for Desjardins and Manulife Smart
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Desjardins and Manulife is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Global and Manulife Smart Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Smart Dividend and Desjardins 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 Desjardins RI Global are associated (or correlated) with Manulife Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Smart Dividend has no effect on the direction of Desjardins i.e., Desjardins and Manulife Smart go up and down completely randomly.
Pair Corralation between Desjardins and Manulife Smart
Assuming the 90 days trading horizon Desjardins RI Global is expected to generate 1.0 times more return on investment than Manulife Smart. However, Desjardins RI Global is 1.0 times less risky than Manulife Smart. It trades about 0.14 of its potential returns per unit of risk. Manulife Smart Dividend is currently generating about 0.13 per unit of risk. If you would invest 2,762 in Desjardins RI Global on September 2, 2024 and sell it today you would earn a total of 369.00 from holding Desjardins RI Global or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Desjardins RI Global vs. Manulife Smart Dividend
Performance |
| Timeline |
| Desjardins RI Global |
| Manulife Smart Dividend |
Desjardins and Manulife Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and Manulife Smart
The main advantage of trading using opposite Desjardins and Manulife Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, Manulife Smart 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 Smart will offset losses from the drop in Manulife Smart's long position.| Desjardins vs. Brompton Global Dividend | Desjardins vs. Brompton European Dividend | Desjardins vs. Brompton North American | Desjardins vs. Global Healthcare Income |
| Manulife Smart vs. Vanguard Total Market | Manulife Smart vs. Vanguard FTSE Emerging | Manulife Smart vs. Vanguard FTSE Global | Manulife Smart vs. Vanguard FTSE Canada |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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