Correlation Between Manulife Financial and First Abacus
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and First Abacus 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 First Abacus 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 First Abacus Financial, you can compare the effects of market volatilities on Manulife Financial and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and First Abacus.
Diversification Opportunities for Manulife Financial and First Abacus
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Manulife and First is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Manulife Financial i.e., Manulife Financial and First Abacus go up and down completely randomly.
Pair Corralation between Manulife Financial and First Abacus
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.25 times more return on investment than First Abacus. However, Manulife Financial is 1.25 times more volatile than First Abacus Financial. It trades about 0.11 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.09 per unit of risk. If you would invest 95,388 in Manulife Financial Corp on August 29, 2024 and sell it today you would earn a total of 104,612 from holding Manulife Financial Corp or generate 109.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 25.87% |
| Values | Daily Returns |
Manulife Financial Corp vs. First Abacus Financial
Performance |
| Timeline |
| Manulife Financial Corp |
| First Abacus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Manulife Financial and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and First Abacus
The main advantage of trading using opposite Manulife Financial and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| Manulife Financial vs. Sun Life Financial | Manulife Financial vs. National Reinsurance | Manulife Financial vs. Allhome Corp | Manulife Financial vs. Jollibee Foods Corp |
| First Abacus vs. VistaREIT | First Abacus vs. Bright Kindle Resources | First Abacus vs. Medco Holdings | First Abacus vs. Allhome 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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