Correlation Between Manulife Multifactor and TD Canadian
Can any of the company-specific risk be diversified away by investing in both Manulife Multifactor and TD Canadian 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 Multifactor and TD Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Multifactor Developed and TD Canadian Equity, you can compare the effects of market volatilities on Manulife Multifactor and TD Canadian 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 Multifactor with a short position of TD Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and TD Canadian.
Diversification Opportunities for Manulife Multifactor and TD Canadian
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and TTP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Developed and TD Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Equity and Manulife Multifactor 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 Multifactor Developed are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Equity has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and TD Canadian go up and down completely randomly.
Pair Corralation between Manulife Multifactor and TD Canadian
Assuming the 90 days trading horizon Manulife Multifactor Developed is expected to generate 0.58 times more return on investment than TD Canadian. However, Manulife Multifactor Developed is 1.73 times less risky than TD Canadian. It trades about -0.13 of its potential returns per unit of risk. TD Canadian Equity is currently generating about -0.2 per unit of risk. If you would invest 3,845 in Manulife Multifactor Developed on October 9, 2024 and sell it today you would lose (41.00) from holding Manulife Multifactor Developed or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Multifactor Developed vs. TD Canadian Equity
Performance |
| Timeline |
| Manulife Multifactor |
| TD Canadian Equity |
Manulife Multifactor and TD Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Multifactor and TD Canadian
The main advantage of trading using opposite Manulife Multifactor and TD Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Multifactor position performs unexpectedly, TD Canadian 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 TD Canadian will offset losses from the drop in TD Canadian's long position.| Manulife Multifactor vs. TD Canadian Equity | Manulife Multifactor vs. TD Equity Index | Manulife Multifactor vs. TD Canadian Aggregate | Manulife Multifactor vs. TD International Equity |
| TD Canadian vs. TD Equity Index | TD Canadian vs. TD International Equity | TD Canadian vs. TD Canadian Aggregate | TD Canadian vs. TD Q Canadian |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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