Correlation Between Alphabet and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc CDR and Manulife Financial Corp, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Manulife Financial.
Diversification Opportunities for Alphabet and Manulife Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alphabet and Manulife is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR 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 Alphabet 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 Alphabet Inc CDR 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 Alphabet i.e., Alphabet and Manulife Financial go up and down completely randomly.
Pair Corralation between Alphabet and Manulife Financial
Assuming the 90 days trading horizon Alphabet Inc CDR is expected to generate 4.43 times more return on investment than Manulife Financial. However, Alphabet is 4.43 times more volatile than Manulife Financial Corp. It trades about -0.02 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.18 per unit of risk. If you would invest 2,879 in Alphabet Inc CDR on September 1, 2024 and sell it today you would lose (31.00) from holding Alphabet Inc CDR or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc CDR vs. Manulife Financial Corp
Performance |
| Timeline |
| Alphabet CDR |
| Manulife Financial Corp |
Alphabet and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Manulife Financial
The main advantage of trading using opposite Alphabet and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.| Alphabet vs. Royal Bank of | Alphabet vs. Toronto Dominion Bank Pref | Alphabet vs. Toronto Dominion Bank | Alphabet vs. Amazon CDR |
| Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Fin Non | Manulife Financial vs. Great West Lifeco | Manulife Financial vs. Great West Lifeco |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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