Correlation Between Manulife Financial and Great West
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Great West 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 Financial and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Financial Corp and Great West Lifeco, you can compare the effects of market volatilities on Manulife Financial and Great West 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 Financial with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Great West.
Diversification Opportunities for Manulife Financial and Great West
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manulife and Great is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Manulife Financial 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 Financial Corp are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Manulife Financial i.e., Manulife Financial and Great West go up and down completely randomly.
Pair Corralation between Manulife Financial and Great West
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.8 times more return on investment than Great West. However, Manulife Financial Corp is 1.25 times less risky than Great West. It trades about -0.05 of its potential returns per unit of risk. Great West Lifeco is currently generating about -0.14 per unit of risk. If you would invest 2,312 in Manulife Financial Corp on August 25, 2024 and sell it today you would lose (26.00) from holding Manulife Financial Corp or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Great West Lifeco
Performance |
| Timeline |
| Manulife Financial Corp |
| Great West Lifeco |
Manulife Financial and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Great West
The main advantage of trading using opposite Manulife Financial and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Financial Corp | Manulife Financial vs. Manulife Finl Srs |
| Great West vs. Precision Drilling | Great West vs. Stampede Drilling | Great West vs. Sparx Technology | Great West vs. Ocumetics Technology Corp |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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