Correlation Between Lincoln National and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Lincoln National 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 Lincoln National and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Manulife Financial Corp, you can compare the effects of market volatilities on Lincoln National 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 Lincoln National with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Manulife Financial.
Diversification Opportunities for Lincoln National and Manulife Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Manulife is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National 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 Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and Manulife Financial go up and down completely randomly.
Pair Corralation between Lincoln National and Manulife Financial
Assuming the 90 days trading horizon Lincoln National is expected to under-perform the Manulife Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Lincoln National is 2.91 times less risky than Manulife Financial. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Manulife Financial Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,002 in Manulife Financial Corp on August 24, 2024 and sell it today you would earn a total of 266.00 from holding Manulife Financial Corp or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln National vs. Manulife Financial Corp
Performance |
| Timeline |
| Lincoln National |
| Manulife Financial Corp |
Lincoln National and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Manulife Financial
The main advantage of trading using opposite Lincoln National and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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.| Lincoln National vs. FG Annuities Life | Lincoln National vs. Globe Life | Lincoln National vs. MetLife Preferred Stock | Lincoln National vs. MetLife Preferred Stock |
| Manulife Financial vs. Prudential Financial | Manulife Financial vs. MetLife | Manulife Financial vs. Unum Group | Manulife Financial vs. Jackson Financial |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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