Correlation Between Manulife Multifactor and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both Manulife Multifactor and Manulife Multifactor 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 Manulife Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Multifactor Mid and Manulife Multifactor Canadian, you can compare the effects of market volatilities on Manulife Multifactor and Manulife Multifactor 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 Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Multifactor and Manulife Multifactor.
Diversification Opportunities for Manulife Multifactor and Manulife Multifactor
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Manulife and Manulife is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Mid and Manulife Multifactor Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor 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 Mid are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Manulife Multifactor go up and down completely randomly.
Pair Corralation between Manulife Multifactor and Manulife Multifactor
Assuming the 90 days trading horizon Manulife Multifactor is expected to generate 1.07 times less return on investment than Manulife Multifactor. In addition to that, Manulife Multifactor is 1.33 times more volatile than Manulife Multifactor Canadian. It trades about 0.07 of its total potential returns per unit of risk. Manulife Multifactor Canadian is currently generating about 0.09 per unit of volatility. If you would invest 3,173 in Manulife Multifactor Canadian on September 3, 2024 and sell it today you would earn a total of 1,161 from holding Manulife Multifactor Canadian or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Multifactor Mid vs. Manulife Multifactor Canadian
Performance |
| Timeline |
| Manulife Multifactor Mid |
| Manulife Multifactor |
Manulife Multifactor and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Multifactor and Manulife Multifactor
The main advantage of trading using opposite Manulife Multifactor and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Multifactor position performs unexpectedly, Manulife Multifactor 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 Manulife Multifactor will offset losses from the drop in Manulife Multifactor's long position.The idea behind Manulife Multifactor Mid and Manulife Multifactor Canadian pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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