Correlation Between National Reinsurance and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and Manulife Financial 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 National Reinsurance and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and Manulife Financial Corp, you can compare the effects of market volatilities on National Reinsurance and Manulife Financial 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 National Reinsurance with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and Manulife Financial.
Diversification Opportunities for National Reinsurance and Manulife Financial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Manulife is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and National Reinsurance 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 National Reinsurance are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of National Reinsurance i.e., National Reinsurance and Manulife Financial go up and down completely randomly.
Pair Corralation between National Reinsurance and Manulife Financial
Assuming the 90 days trading horizon National Reinsurance is expected to generate 1.4 times less return on investment than Manulife Financial. In addition to that, National Reinsurance is 1.2 times more volatile than Manulife Financial Corp. It trades about 0.07 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.11 per unit of volatility. If you would invest 95,388 in Manulife Financial Corp on August 29, 2024 and sell it today you would earn a total of 104,612 from holding Manulife Financial Corp or generate 109.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.86% |
| Values | Daily Returns |
National Reinsurance vs. Manulife Financial Corp
Performance |
| Timeline |
| National Reinsurance |
| Manulife Financial Corp |
National Reinsurance and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and Manulife Financial
The main advantage of trading using opposite National Reinsurance and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, Manulife Financial 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 Financial will offset losses from the drop in Manulife Financial's long position.| National Reinsurance vs. Manulife Financial Corp | National Reinsurance vs. Sun Life Financial | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp |
| Manulife Financial vs. Sun Life Financial | Manulife Financial vs. National Reinsurance | Manulife Financial vs. Allhome Corp | Manulife Financial vs. Jollibee Foods 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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