Correlation Between Manulife Financial and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Prime Dividend 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 Prime Dividend 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 Prime Dividend Corp, you can compare the effects of market volatilities on Manulife Financial and Prime Dividend 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 Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Prime Dividend.
Diversification Opportunities for Manulife Financial and Prime Dividend
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manulife and Prime is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp 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 Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and Prime Dividend go up and down completely randomly.
Pair Corralation between Manulife Financial and Prime Dividend
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.45 times more return on investment than Prime Dividend. However, Manulife Financial Corp is 2.21 times less risky than Prime Dividend. It trades about 0.03 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about -0.08 per unit of risk. If you would invest 4,403 in Manulife Financial Corp on October 24, 2024 and sell it today you would earn a total of 20.00 from holding Manulife Financial Corp or generate 0.45% 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. Prime Dividend Corp
Performance |
| Timeline |
| Manulife Financial Corp |
| Prime Dividend Corp |
Manulife Financial and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Prime Dividend
The main advantage of trading using opposite Manulife Financial and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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