Correlation Between Manulife Financial and IGM Financial
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and IGM Financial 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 IGM Financial 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 IGM Financial, you can compare the effects of market volatilities on Manulife Financial and IGM Financial 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 IGM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and IGM Financial.
Diversification Opportunities for Manulife Financial and IGM Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Manulife and IGM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM 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 IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Manulife Financial i.e., Manulife Financial and IGM Financial go up and down completely randomly.
Pair Corralation between Manulife Financial and IGM Financial
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.01 times more return on investment than IGM Financial. However, Manulife Financial is 1.01 times more volatile than IGM Financial. It trades about 0.13 of its potential returns per unit of risk. IGM Financial is currently generating about 0.06 per unit of risk. If you would invest 2,292 in Manulife Financial Corp on August 28, 2024 and sell it today you would earn a total of 2,189 from holding Manulife Financial Corp or generate 95.51% 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. IGM Financial
Performance |
| Timeline |
| Manulife Financial Corp |
| IGM Financial |
Manulife Financial and IGM Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and IGM Financial
The main advantage of trading using opposite Manulife Financial and IGM Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, IGM Financial 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 IGM Financial will offset losses from the drop in IGM Financial'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 |
| IGM Financial vs. NVIDIA CDR | IGM Financial vs. Apple Inc CDR | IGM Financial vs. Microsoft Corp CDR | IGM Financial vs. Amazon CDR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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