Correlation Between Manulife Multifactor and EcoSynthetix
Can any of the company-specific risk be diversified away by investing in both Manulife Multifactor and EcoSynthetix 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 EcoSynthetix 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 EcoSynthetix, you can compare the effects of market volatilities on Manulife Multifactor and EcoSynthetix 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 EcoSynthetix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and EcoSynthetix.
Diversification Opportunities for Manulife Multifactor and EcoSynthetix
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Manulife and EcoSynthetix is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Canadian and EcoSynthetix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoSynthetix 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 EcoSynthetix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoSynthetix has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and EcoSynthetix go up and down completely randomly.
Pair Corralation between Manulife Multifactor and EcoSynthetix
Assuming the 90 days trading horizon Manulife Multifactor Canadian is expected to generate 0.31 times more return on investment than EcoSynthetix. However, Manulife Multifactor Canadian is 3.26 times less risky than EcoSynthetix. It trades about 0.17 of its potential returns per unit of risk. EcoSynthetix is currently generating about -0.02 per unit of risk. If you would invest 4,176 in Manulife Multifactor Canadian on September 1, 2024 and sell it today you would earn a total of 123.00 from holding Manulife Multifactor Canadian or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Manulife Multifactor Canadian vs. EcoSynthetix
Performance |
| Timeline |
| Manulife Multifactor |
| EcoSynthetix |
Manulife Multifactor and EcoSynthetix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Multifactor and EcoSynthetix
The main advantage of trading using opposite Manulife Multifactor and EcoSynthetix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Multifactor position performs unexpectedly, EcoSynthetix 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 EcoSynthetix will offset losses from the drop in EcoSynthetix's long position.The idea behind Manulife Multifactor Canadian and EcoSynthetix 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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