Correlation Between GT Capital and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both GT Capital 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 GT Capital and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GT Capital Holdings and Manulife Financial Corp, you can compare the effects of market volatilities on GT Capital 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 GT Capital with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Manulife Financial.
Diversification Opportunities for GT Capital and Manulife Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GTCAP and Manulife is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings 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 GT Capital 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 GT Capital Holdings 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 GT Capital i.e., GT Capital and Manulife Financial go up and down completely randomly.
Pair Corralation between GT Capital and Manulife Financial
Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Manulife Financial. But the stock apears to be less risky and, when comparing its historical volatility, GT Capital Holdings is 3.15 times less risky than Manulife Financial. The stock trades about -0.21 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 172,373 in Manulife Financial Corp on September 1, 2024 and sell it today you would earn a total of 26,627 from holding Manulife Financial Corp or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
GT Capital Holdings vs. Manulife Financial Corp
Performance |
| Timeline |
| GT Capital Holdings |
| Manulife Financial Corp |
GT Capital and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and Manulife Financial
The main advantage of trading using opposite GT Capital and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital 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.| GT Capital vs. Rizal Commercial Banking | GT Capital vs. Metropolitan Bank Trust | GT Capital vs. SM Investments Corp | GT Capital vs. Security Bank Corp |
| Manulife Financial vs. GT Capital Holdings | Manulife Financial vs. Allhome Corp | Manulife Financial vs. Jollibee Foods Corp | Manulife Financial vs. LFM Properties Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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