Correlation Between Power and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Power 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 Power and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power and Manulife Financial Corp, you can compare the effects of market volatilities on Power 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 Power with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power and Manulife Financial.
Diversification Opportunities for Power and Manulife Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Manulife is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Power 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 Power 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 Power 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 Power i.e., Power and Manulife Financial go up and down completely randomly.
Pair Corralation between Power and Manulife Financial
Assuming the 90 days trading horizon Power is expected to generate 1.21 times more return on investment than Manulife Financial. However, Power is 1.21 times more volatile than Manulife Financial Corp. It trades about 0.26 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.1 per unit of risk. If you would invest 4,331 in Power on November 9, 2024 and sell it today you would earn a total of 346.00 from holding Power or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power vs. Manulife Financial Corp
Performance |
| Timeline |
| Power |
| Manulife Financial Corp |
Power and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power and Manulife Financial
The main advantage of trading using opposite Power and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power 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.| Power vs. Great West Lifeco | Power vs. Manulife Financial Corp | Power vs. Sun Life Financial | Power vs. Fortis Inc |
| Manulife Financial vs. Bank of Nova | Manulife Financial vs. Sun Life Financial | Manulife Financial vs. Toronto Dominion Bank | Manulife Financial vs. Royal Bank of |
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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