Correlation Between Manulife Finl and Data Communications
Can any of the company-specific risk be diversified away by investing in both Manulife Finl and Data Communications 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 Finl and Data Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Finl Srs and Data Communications Management, you can compare the effects of market volatilities on Manulife Finl and Data Communications 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 Finl with a short position of Data Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Finl and Data Communications.
Diversification Opportunities for Manulife Finl and Data Communications
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Data is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Finl Srs and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications and Manulife Finl 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 Finl Srs are associated (or correlated) with Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of Manulife Finl i.e., Manulife Finl and Data Communications go up and down completely randomly.
Pair Corralation between Manulife Finl and Data Communications
Assuming the 90 days trading horizon Manulife Finl is expected to generate 2.82 times less return on investment than Data Communications. But when comparing it to its historical volatility, Manulife Finl Srs is 3.83 times less risky than Data Communications. It trades about 0.05 of its potential returns per unit of risk. Data Communications Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Data Communications Management on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Data Communications Management or generate 36.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Finl Srs vs. Data Communications Management
Performance |
| Timeline |
| Manulife Finl Srs |
| Data Communications |
Manulife Finl and Data Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Finl and Data Communications
The main advantage of trading using opposite Manulife Finl and Data Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Finl position performs unexpectedly, Data Communications 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 Data Communications will offset losses from the drop in Data Communications' long position.| Manulife Finl vs. Orbit Garant Drilling | Manulife Finl vs. Canso Select Opportunities | Manulife Finl vs. Arbor Metals Corp | Manulife Finl vs. Highwood Asset Management |
| Data Communications vs. Baylin Technologies | Data Communications vs. Kits Eyecare | Data Communications vs. Greenlane Renewables | Data Communications vs. Supremex |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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