Correlation Between Manulife Financial and MetLife
Can any of the company-specific risk be diversified away by investing in both Manulife Financial and MetLife 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 MetLife 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 MetLife, you can compare the effects of market volatilities on Manulife Financial and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and MetLife.
Diversification Opportunities for Manulife Financial and MetLife
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Manulife and MetLife is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Manulife Financial i.e., Manulife Financial and MetLife go up and down completely randomly.
Pair Corralation between Manulife Financial and MetLife
Considering the 90-day investment horizon Manulife Financial Corp is expected to generate 0.73 times more return on investment than MetLife. However, Manulife Financial Corp is 1.38 times less risky than MetLife. It trades about 0.22 of its potential returns per unit of risk. MetLife is currently generating about 0.16 per unit of risk. If you would invest 2,730 in Manulife Financial Corp on August 28, 2024 and sell it today you would earn a total of 466.00 from holding Manulife Financial Corp or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. MetLife
Performance |
| Timeline |
| Manulife Financial Corp |
| MetLife |
Manulife Financial and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and MetLife
The main advantage of trading using opposite Manulife Financial and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.| Manulife Financial vs. Prudential Financial | Manulife Financial vs. MetLife | Manulife Financial vs. Unum Group | Manulife Financial vs. Jackson Financial |
| MetLife vs. Morningstar Unconstrained Allocation | MetLife vs. Via Renewables | MetLife vs. Sitka Gold Corp | MetLife vs. MSCI ACWI exAUCONSUMER |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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