Correlation Between Manulife Financial and National Bank
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on Manulife Financial and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and National Bank.
Diversification Opportunities for Manulife Financial and National Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and National is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Manulife Financial i.e., Manulife Financial and National Bank go up and down completely randomly.
Pair Corralation between Manulife Financial and National Bank
Assuming the 90 days trading horizon Manulife Financial is expected to generate 1.22 times less return on investment than National Bank. In addition to that, Manulife Financial is 1.22 times more volatile than National Bank of. It trades about 0.06 of its total potential returns per unit of risk. National Bank of is currently generating about 0.09 per unit of volatility. If you would invest 1,614 in National Bank of on October 27, 2024 and sell it today you would earn a total of 881.00 from holding National Bank of or generate 54.58% 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. National Bank of
Performance |
| Timeline |
| Manulife Financial Corp |
| National Bank |
Manulife Financial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and National Bank
The main advantage of trading using opposite Manulife Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Manulife Financial vs. Rogers Communications | Manulife Financial vs. High Liner Foods | Manulife Financial vs. Advent Wireless | Manulife Financial vs. T2 Metals Corp |
| National Bank vs. Prime Dividend Corp | National Bank vs. Canadian Life Companies | National Bank vs. Financial 15 Split | National Bank vs. Dividend 15 Split |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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