Correlation Between Manulife Financial and North American
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and North American 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 North American 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 North American Financial, you can compare the effects of market volatilities on Manulife Financial and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and North American.
Diversification Opportunities for Manulife Financial and North American
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Manulife and North is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Manulife Financial i.e., Manulife Financial and North American go up and down completely randomly.
Pair Corralation between Manulife Financial and North American
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.49 times more return on investment than North American. However, Manulife Financial Corp is 2.02 times less risky than North American. It trades about 0.11 of its potential returns per unit of risk. North American Financial is currently generating about 0.05 per unit of risk. If you would invest 2,368 in Manulife Financial Corp on October 11, 2024 and sell it today you would earn a total of 2,042 from holding Manulife Financial Corp or generate 86.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. North American Financial
Performance |
| Timeline |
| Manulife Financial Corp |
| North American Financial |
Manulife Financial and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and North American
The main advantage of trading using opposite Manulife Financial and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's 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 |
| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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