Correlation Between Manulife Financial and Lincoln National
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Lincoln National 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 Lincoln National 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 Lincoln National, you can compare the effects of market volatilities on Manulife Financial and Lincoln National 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 Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Lincoln National.
Diversification Opportunities for Manulife Financial and Lincoln National
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Lincoln is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Manulife Financial i.e., Manulife Financial and Lincoln National go up and down completely randomly.
Pair Corralation between Manulife Financial and Lincoln National
Considering the 90-day investment horizon Manulife Financial Corp is expected to under-perform the Lincoln National. But the stock apears to be less risky and, when comparing its historical volatility, Manulife Financial Corp is 1.38 times less risky than Lincoln National. The stock trades about -0.07 of its potential returns per unit of risk. The Lincoln National is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,136 in Lincoln National on November 3, 2024 and sell it today you would earn a total of 390.87 from holding Lincoln National or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Lincoln National
Performance |
| Timeline |
| Manulife Financial Corp |
| Lincoln National |
Manulife Financial and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Lincoln National
The main advantage of trading using opposite Manulife Financial and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.| Manulife Financial vs. Prudential Financial | Manulife Financial vs. MetLife | Manulife Financial vs. Unum Group | Manulife Financial vs. Jackson Financial |
| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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