Correlation Between Dynamic Active and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both Dynamic Active and Manulife Multifactor 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 Dynamic Active and Manulife Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Active Dividend and Manulife Multifactor Large, you can compare the effects of market volatilities on Dynamic Active and Manulife Multifactor 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 Dynamic Active with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and Manulife Multifactor.
Diversification Opportunities for Dynamic Active and Manulife Multifactor
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dynamic and Manulife is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Dividend and Manulife Multifactor Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and Dynamic Active 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 Dynamic Active Dividend are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of Dynamic Active i.e., Dynamic Active and Manulife Multifactor go up and down completely randomly.
Pair Corralation between Dynamic Active and Manulife Multifactor
Assuming the 90 days trading horizon Dynamic Active Dividend is expected to generate 1.43 times more return on investment than Manulife Multifactor. However, Dynamic Active is 1.43 times more volatile than Manulife Multifactor Large. It trades about 0.33 of its potential returns per unit of risk. Manulife Multifactor Large is currently generating about 0.36 per unit of risk. If you would invest 5,990 in Dynamic Active Dividend on September 4, 2024 and sell it today you would earn a total of 502.00 from holding Dynamic Active Dividend or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dynamic Active Dividend vs. Manulife Multifactor Large
Performance |
| Timeline |
| Dynamic Active Dividend |
| Manulife Multifactor |
Dynamic Active and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Active and Manulife Multifactor
The main advantage of trading using opposite Dynamic Active and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active position performs unexpectedly, Manulife Multifactor 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 Multifactor will offset losses from the drop in Manulife Multifactor's long position.| Dynamic Active vs. Franklin Bissett Corporate | Dynamic Active vs. FT AlphaDEX Industrials | Dynamic Active vs. BMO Aggregate Bond | Dynamic Active vs. iShares Canadian HYBrid |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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