Correlation Between Great West and Manulife Finl
Can any of the company-specific risk be diversified away by investing in both Great West and Manulife Finl 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 Great West and Manulife Finl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Manulife Finl Srs, you can compare the effects of market volatilities on Great West and Manulife Finl 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 Great West with a short position of Manulife Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Manulife Finl.
Diversification Opportunities for Great West and Manulife Finl
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Manulife is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs and Great West 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 Great West Lifeco are associated (or correlated) with Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of Great West i.e., Great West and Manulife Finl go up and down completely randomly.
Pair Corralation between Great West and Manulife Finl
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Manulife Finl. But the preferred stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 1.16 times less risky than Manulife Finl. The preferred stock trades about -0.27 of its potential returns per unit of risk. The Manulife Finl Srs is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 2,028 in Manulife Finl Srs on August 29, 2024 and sell it today you would lose (97.00) from holding Manulife Finl Srs or give up 4.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Manulife Finl Srs
Performance |
| Timeline |
| Great West Lifeco |
| Manulife Finl Srs |
Great West and Manulife Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Manulife Finl
The main advantage of trading using opposite Great West and Manulife Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Manulife Finl 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 Finl will offset losses from the drop in Manulife Finl's long position.| Great West vs. Guru Organic Energy | Great West vs. Cogeco Communications | Great West vs. MTY Food Group | Great West vs. Hemisphere Energy |
| Manulife Finl vs. US Financial 15 | Manulife Finl vs. Leons Furniture Limited | Manulife Finl vs. iA Financial | Manulife Finl vs. Canso Credit Trust |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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