Correlation Between Manulife Finl and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Manulife Finl and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Manulife Finl and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Finl and Restaurant Brands.
Diversification Opportunities for Manulife Finl and Restaurant Brands
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Restaurant is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Finl Srs and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Manulife Finl i.e., Manulife Finl and Restaurant Brands go up and down completely randomly.
Pair Corralation between Manulife Finl and Restaurant Brands
Assuming the 90 days trading horizon Manulife Finl Srs is expected to generate 0.59 times more return on investment than Restaurant Brands. However, Manulife Finl Srs is 1.69 times less risky than Restaurant Brands. It trades about 0.01 of its potential returns per unit of risk. Restaurant Brands International is currently generating about -0.06 per unit of risk. If you would invest 1,945 in Manulife Finl Srs on January 25, 2025 and sell it today you would earn a total of 17.00 from holding Manulife Finl Srs or generate 0.87% 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. Restaurant Brands Internationa
Performance |
| Timeline |
| Manulife Finl Srs |
| Restaurant Brands |
Manulife Finl and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Finl and Restaurant Brands
The main advantage of trading using opposite Manulife Finl and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Finl position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Manulife Finl vs. Cogeco Communications | Manulife Finl vs. Gamehost | Manulife Finl vs. Contagious Gaming | Manulife Finl vs. Brookfield Office Properties |
| Restaurant Brands vs. Canadian Tire | Restaurant Brands vs. Dollarama | Restaurant Brands vs. Nutrien | Restaurant Brands vs. Magna International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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