Correlation Between Manulife Multifactor and First Asset
Can any of the company-specific risk be diversified away by investing in both Manulife Multifactor and First Asset 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 Manulife Multifactor and First Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Multifactor Canadian and First Asset Morningstar, you can compare the effects of market volatilities on Manulife Multifactor and First Asset 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 Manulife Multifactor with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and First Asset.
Diversification Opportunities for Manulife Multifactor and First Asset
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Canadian and First Asset Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Morningstar and Manulife Multifactor 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 Manulife Multifactor Canadian are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Morningstar has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and First Asset go up and down completely randomly.
Pair Corralation between Manulife Multifactor and First Asset
Assuming the 90 days trading horizon Manulife Multifactor is expected to generate 4.25 times less return on investment than First Asset. But when comparing it to its historical volatility, Manulife Multifactor Canadian is 1.11 times less risky than First Asset. It trades about 0.05 of its potential returns per unit of risk. First Asset Morningstar is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,237 in First Asset Morningstar on October 22, 2024 and sell it today you would earn a total of 94.00 from holding First Asset Morningstar or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Multifactor Canadian vs. First Asset Morningstar
Performance |
| Timeline |
| Manulife Multifactor |
| First Asset Morningstar |
Manulife Multifactor and First Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Multifactor and First Asset
The main advantage of trading using opposite Manulife Multifactor and First Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Multifactor position performs unexpectedly, First Asset 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 First Asset will offset losses from the drop in First Asset's long position.The idea behind Manulife Multifactor Canadian and First Asset Morningstar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| First Asset vs. First Trust Indxx | First Asset vs. First Trust Senior | First Asset vs. First Trust AlphaDEX | First Asset vs. First Trust Indxx |
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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |