Correlation Between Global X and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both Global X and Manulife Multifactor 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 Global X and Manulife Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Big and Manulife Multifactor Canadian, you can compare the effects of market volatilities on Global X and Manulife Multifactor 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 Global X with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Manulife Multifactor.
Diversification Opportunities for Global X and Manulife Multifactor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Manulife is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global X Big and Manulife Multifactor Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and Global X 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 Global X Big are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of Global X i.e., Global X and Manulife Multifactor go up and down completely randomly.
Pair Corralation between Global X and Manulife Multifactor
Assuming the 90 days trading horizon Global X Big is expected to generate 2.38 times more return on investment than Manulife Multifactor. However, Global X is 2.38 times more volatile than Manulife Multifactor Canadian. It trades about 0.09 of its potential returns per unit of risk. Manulife Multifactor Canadian is currently generating about 0.08 per unit of risk. If you would invest 2,696 in Global X Big on September 1, 2024 and sell it today you would earn a total of 674.00 from holding Global X Big or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Big vs. Manulife Multifactor Canadian
Performance |
| Timeline |
| Global X Big |
| Manulife Multifactor |
Global X and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Manulife Multifactor
The main advantage of trading using opposite Global X and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Manulife Multifactor 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 Multifactor will offset losses from the drop in Manulife Multifactor's long position.| Global X vs. Blockchain Technologies ETF | Global X vs. Global X Robotics | Global X vs. Evolve Automobile Innovation | Global X vs. Evolve Innovation Index |
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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