Correlation Between Manulife Financial and Advent Wireless
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Advent Wireless 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 Advent Wireless 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 Advent Wireless, you can compare the effects of market volatilities on Manulife Financial and Advent Wireless 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 Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Advent Wireless.
Diversification Opportunities for Manulife Financial and Advent Wireless
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manulife and Advent is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless 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 Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Manulife Financial i.e., Manulife Financial and Advent Wireless go up and down completely randomly.
Pair Corralation between Manulife Financial and Advent Wireless
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.29 times more return on investment than Advent Wireless. However, Manulife Financial Corp is 3.48 times less risky than Advent Wireless. It trades about 0.17 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.04 per unit of risk. If you would invest 3,190 in Manulife Financial Corp on August 25, 2024 and sell it today you would earn a total of 1,347 from holding Manulife Financial Corp or generate 42.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Advent Wireless
Performance |
| Timeline |
| Manulife Financial Corp |
| Advent Wireless |
Manulife Financial and Advent Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Advent Wireless
The main advantage of trading using opposite Manulife Financial and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Advent Wireless 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 Advent Wireless will offset losses from the drop in Advent Wireless' long position.| Manulife Financial vs. Bank of Nova | Manulife Financial vs. Sun Life Financial | Manulife Financial vs. Toronto Dominion Bank | Manulife Financial vs. Royal Bank of |
| Advent Wireless vs. Telus Corp | Advent Wireless vs. Toronto Dominion Bank | Advent Wireless vs. Manulife Financial Corp | Advent Wireless vs. Canadian Natural Resources |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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