Correlation Between Prudential Public and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Prudential Public 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 Prudential Public and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Public Limited and Manulife Financial, you can compare the effects of market volatilities on Prudential Public 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 Prudential Public with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and Manulife Financial.
Diversification Opportunities for Prudential Public and Manulife Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Manulife is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial and Prudential Public 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 Prudential Public Limited 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 has no effect on the direction of Prudential Public i.e., Prudential Public and Manulife Financial go up and down completely randomly.
Pair Corralation between Prudential Public and Manulife Financial
Considering the 90-day investment horizon Prudential Public Limited is expected to under-perform the Manulife Financial. In addition to that, Prudential Public is 5.73 times more volatile than Manulife Financial. It trades about -0.06 of its total potential returns per unit of risk. Manulife Financial is currently generating about 0.22 per unit of volatility. If you would invest 1,377 in Manulife Financial on August 28, 2024 and sell it today you would earn a total of 23.00 from holding Manulife Financial or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Public Limited vs. Manulife Financial
Performance |
| Timeline |
| Prudential Public |
| Manulife Financial |
Prudential Public and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Public and Manulife Financial
The main advantage of trading using opposite Prudential Public and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public 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.| Prudential Public vs. CNO Financial Group | Prudential Public vs. Jackson Financial | Prudential Public vs. MetLife Preferred Stock | Prudential Public vs. Jackson Financial |
| Manulife Financial vs. CNO Financial Group | Manulife Financial vs. Genworth Financial | Manulife Financial vs. MetLife Preferred Stock | Manulife Financial vs. Prudential Public Limited |
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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