Correlation Between High Liner and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both High Liner 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 High Liner and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Manulife Financial Corp, you can compare the effects of market volatilities on High Liner 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 High Liner with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Manulife Financial.
Diversification Opportunities for High Liner and Manulife Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High and Manulife is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods 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 High Liner 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 High Liner Foods 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 High Liner i.e., High Liner and Manulife Financial go up and down completely randomly.
Pair Corralation between High Liner and Manulife Financial
Assuming the 90 days trading horizon High Liner is expected to generate 44.27 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, High Liner Foods is 1.02 times less risky than Manulife Financial. It trades about 0.01 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,730 in Manulife Financial Corp on November 5, 2024 and sell it today you would earn a total of 120.00 from holding Manulife Financial Corp or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Manulife Financial Corp
Performance |
| Timeline |
| High Liner Foods |
| Manulife Financial Corp |
High Liner and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Manulife Financial
The main advantage of trading using opposite High Liner and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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