Correlation Between Manulife Financial and GT Capital
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and GT Capital 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 GT Capital 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 GT Capital Holdings, you can compare the effects of market volatilities on Manulife Financial and GT Capital 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 GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and GT Capital.
Diversification Opportunities for Manulife Financial and GT Capital
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Manulife and GTCAP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings 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 GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Manulife Financial i.e., Manulife Financial and GT Capital go up and down completely randomly.
Pair Corralation between Manulife Financial and GT Capital
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 2.52 times more return on investment than GT Capital. However, Manulife Financial is 2.52 times more volatile than GT Capital Holdings. It trades about 0.21 of its potential returns per unit of risk. GT Capital Holdings is currently generating about 0.02 per unit of risk. If you would invest 130,766 in Manulife Financial Corp on September 2, 2024 and sell it today you would earn a total of 68,234 from holding Manulife Financial Corp or generate 52.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 73.85% |
| Values | Daily Returns |
Manulife Financial Corp vs. GT Capital Holdings
Performance |
| Timeline |
| Manulife Financial Corp |
| GT Capital Holdings |
Manulife Financial and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and GT Capital
The main advantage of trading using opposite Manulife Financial and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital's long position.| Manulife Financial vs. GT Capital Holdings | Manulife Financial vs. Allhome Corp | Manulife Financial vs. Jollibee Foods Corp | Manulife Financial vs. LFM Properties Corp |
| GT Capital vs. Philex Mining Corp | GT Capital vs. Metropolitan Bank Trust | GT Capital vs. Apex Mining Co | GT Capital vs. STI Education Systems |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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