Correlation Between InPlay Oil and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Manulife Financial Corp, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Manulife Financial.
Diversification Opportunities for InPlay Oil and Manulife Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InPlay and Manulife is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Manulife Financial go up and down completely randomly.
Pair Corralation between InPlay Oil and Manulife Financial
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Manulife Financial. In addition to that, InPlay Oil is 2.08 times more volatile than Manulife Financial Corp. It trades about -0.02 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.06 per unit of volatility. If you would invest 1,550 in Manulife Financial Corp on September 4, 2024 and sell it today you would earn a total of 530.00 from holding Manulife Financial Corp or generate 34.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Manulife Financial Corp
Performance |
| Timeline |
| InPlay Oil Corp |
| Manulife Financial Corp |
InPlay Oil and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Manulife Financial
The main advantage of trading using opposite InPlay Oil and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.| InPlay Oil vs. Gear Energy | InPlay Oil vs. Journey Energy | InPlay Oil vs. Yangarra Resources | InPlay Oil vs. Pine Cliff Energy |
| Manulife Financial vs. Medical Facilities | Manulife Financial vs. Hemisphere Energy | Manulife Financial vs. Orbit Garant Drilling | Manulife Financial vs. InPlay Oil 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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