Correlation Between GlaxoSmithKline PLC and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC 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 GlaxoSmithKline PLC and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Manulife Financial Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC 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 GlaxoSmithKline PLC with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Manulife Financial.
Diversification Opportunities for GlaxoSmithKline PLC and Manulife Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Manulife is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Manulife Financial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Manulife Financial
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 24.9 times less return on investment than Manulife Financial. In addition to that, GlaxoSmithKline PLC is 1.14 times more volatile than Manulife Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.09 per unit of volatility. If you would invest 1,555 in Manulife Financial Corp on August 26, 2024 and sell it today you would earn a total of 731.00 from holding Manulife Financial Corp or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Manulife Financial Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Manulife Financial Corp |
GlaxoSmithKline PLC and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Manulife Financial
The main advantage of trading using opposite GlaxoSmithKline PLC and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC 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.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Financial Corp | 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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