Correlation Between Manulife Fin and Power Financial
Can any of the company-specific risk be diversified away by investing in both Manulife Fin and Power 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 Manulife Fin and Power Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Fin Non and Power Financial 51, you can compare the effects of market volatilities on Manulife Fin and Power 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 Manulife Fin with a short position of Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Fin and Power Financial.
Diversification Opportunities for Manulife Fin and Power Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Power is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Fin Non and Power Financial 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 51 and Manulife Fin 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 Fin Non are associated (or correlated) with Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial 51 has no effect on the direction of Manulife Fin i.e., Manulife Fin and Power Financial go up and down completely randomly.
Pair Corralation between Manulife Fin and Power Financial
Assuming the 90 days trading horizon Manulife Fin Non is expected to generate 1.02 times more return on investment than Power Financial. However, Manulife Fin is 1.02 times more volatile than Power Financial 51. It trades about 0.08 of its potential returns per unit of risk. Power Financial 51 is currently generating about 0.03 per unit of risk. If you would invest 1,781 in Manulife Fin Non on August 25, 2024 and sell it today you would earn a total of 603.00 from holding Manulife Fin Non or generate 33.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Fin Non vs. Power Financial 51
Performance |
| Timeline |
| Manulife Fin Non |
| Power Financial 51 |
Manulife Fin and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Fin and Power Financial
The main advantage of trading using opposite Manulife Fin and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Fin position performs unexpectedly, Power 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 Power Financial will offset losses from the drop in Power Financial's long position.| Manulife Fin vs. Manulife Financial Corp | Manulife Fin vs. Manulife Financial Corp | Manulife Fin vs. Manulife Financial Corp | Manulife Fin vs. Manulife Financial Corp |
| Power Financial vs. VIP Entertainment Technologies | Power Financial vs. Cogeco Communications | Power Financial vs. TGS Esports | Power Financial vs. Verizon Communications CDR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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