Correlation Between Globe Life and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Globe Life 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 Globe Life and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Life and Manulife Financial Corp, you can compare the effects of market volatilities on Globe Life 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 Globe Life with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and Manulife Financial.
Diversification Opportunities for Globe Life and Manulife Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globe and Manulife is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 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 Globe Life 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 Globe Life 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 Globe Life i.e., Globe Life and Manulife Financial go up and down completely randomly.
Pair Corralation between Globe Life and Manulife Financial
Allowing for the 90-day total investment horizon Globe Life is expected to generate 1.02 times less return on investment than Manulife Financial. In addition to that, Globe Life is 1.03 times more volatile than Manulife Financial Corp. It trades about 0.16 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.17 per unit of volatility. If you would invest 3,023 in Manulife Financial Corp on August 27, 2024 and sell it today you would earn a total of 173.00 from holding Manulife Financial Corp or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Life vs. Manulife Financial Corp
Performance |
| Timeline |
| Globe Life |
| Manulife Financial Corp |
Globe Life and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Life and Manulife Financial
The main advantage of trading using opposite Globe Life and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life 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.| Globe Life vs. Prudential Public Limited | Globe Life vs. CNO Financial Group | Globe Life vs. MetLife Preferred Stock | Globe Life vs. MetLife |
| Manulife Financial vs. Prudential Financial | Manulife Financial vs. MetLife | Manulife Financial vs. Unum Group | Manulife Financial vs. Jackson Financial |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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