Correlation Between Manulife Financial and Brookfield
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Brookfield 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 Brookfield 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 Brookfield, you can compare the effects of market volatilities on Manulife Financial and Brookfield 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 Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Brookfield.
Diversification Opportunities for Manulife Financial and Brookfield
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Brookfield is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield 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 Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Manulife Financial i.e., Manulife Financial and Brookfield go up and down completely randomly.
Pair Corralation between Manulife Financial and Brookfield
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 2.76 times more return on investment than Brookfield. However, Manulife Financial is 2.76 times more volatile than Brookfield. It trades about 0.26 of its potential returns per unit of risk. Brookfield is currently generating about -0.16 per unit of risk. If you would invest 1,730 in Manulife Financial Corp on November 6, 2024 and sell it today you would earn a total of 120.00 from holding Manulife Financial Corp or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Brookfield
Performance |
| Timeline |
| Manulife Financial Corp |
| Brookfield |
Manulife Financial and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Brookfield
The main advantage of trading using opposite Manulife Financial and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Brookfield 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 Brookfield will offset losses from the drop in Brookfield's long position.| Manulife Financial vs. Berkshire Hathaway CDR | Manulife Financial vs. Apple Inc CDR | Manulife Financial vs. Microsoft Corp CDR | Manulife Financial vs. Alphabet Inc CDR |
| Brookfield vs. Thunderbird Entertainment Group | Brookfield vs. Data Communications Management | Brookfield vs. Postmedia Network Canada | Brookfield vs. Western Investment |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |