Correlation Between Manulife Financial and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Suncor Energy 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 Suncor Energy 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 Suncor Energy, you can compare the effects of market volatilities on Manulife Financial and Suncor Energy 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 Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Suncor Energy.
Diversification Opportunities for Manulife Financial and Suncor Energy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Manulife and Suncor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy 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 Suncor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncor Energy has no effect on the direction of Manulife Financial i.e., Manulife Financial and Suncor Energy go up and down completely randomly.
Pair Corralation between Manulife Financial and Suncor Energy
Assuming the 90 days trading horizon Manulife Financial is expected to generate 18.69 times less return on investment than Suncor Energy. But when comparing it to its historical volatility, Manulife Financial Corp is 1.21 times less risky than Suncor Energy. It trades about 0.03 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 5,037 in Suncor Energy on October 22, 2024 and sell it today you would earn a total of 606.00 from holding Suncor Energy or generate 12.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Manulife Financial Corp vs. Suncor Energy
Performance |
Timeline |
Manulife Financial Corp |
Suncor Energy |
Manulife Financial and Suncor Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Manulife Financial and Suncor Energy
The main advantage of trading using opposite Manulife Financial and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Suncor Energy 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 Suncor Energy will offset losses from the drop in Suncor Energy'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 |
Suncor Energy vs. Enbridge | Suncor Energy vs. Canadian Natural Resources | Suncor Energy vs. Toronto Dominion Bank | Suncor Energy vs. Bank of Nova |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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