Correlation Between Manulife Financial and Power Financial
Can any of the company-specific risk be diversified away by investing in both Manulife Financial 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 Financial 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 Financial Corp and Power Financial 51, you can compare the effects of market volatilities on Manulife Financial 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 Financial with a short position of Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Power Financial.
Diversification Opportunities for Manulife Financial and Power Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Manulife and Power is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp 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 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 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 Financial i.e., Manulife Financial and Power Financial go up and down completely randomly.
Pair Corralation between Manulife Financial and Power Financial
Assuming the 90 days trading horizon Manulife Financial Corp is expected to under-perform the Power Financial. In addition to that, Manulife Financial is 1.11 times more volatile than Power Financial 51. It trades about -0.14 of its total potential returns per unit of risk. Power Financial 51 is currently generating about -0.15 per unit of volatility. If you would invest 2,112 in Power Financial 51 on August 29, 2024 and sell it today you would lose (52.00) from holding Power Financial 51 or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Power Financial 51
Performance |
| Timeline |
| Manulife Financial Corp |
| Power Financial 51 |
Manulife Financial and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Power Financial
The main advantage of trading using opposite Manulife Financial and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial 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 Financial vs. Forstrong Global Income | Manulife Financial vs. BMO Aggregate Bond | Manulife Financial vs. Terreno Resources Corp | Manulife Financial vs. iShares Canadian HYBrid |
| Power Financial vs. Manulife Financial Corp | Power Financial vs. Great West Lifeco | Power Financial vs. Great West Lifeco |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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