Correlation Between Royal Helium and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Royal Helium 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 Royal Helium and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Helium and Manulife Financial Corp, you can compare the effects of market volatilities on Royal Helium 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 Royal Helium with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Helium and Manulife Financial.
Diversification Opportunities for Royal Helium and Manulife Financial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Manulife is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium 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 Royal Helium 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 Royal Helium 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 Royal Helium i.e., Royal Helium and Manulife Financial go up and down completely randomly.
Pair Corralation between Royal Helium and Manulife Financial
Assuming the 90 days horizon Royal Helium is expected to under-perform the Manulife Financial. In addition to that, Royal Helium is 8.95 times more volatile than Manulife Financial Corp. It trades about -0.04 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,970 in Manulife Financial Corp on September 3, 2024 and sell it today you would earn a total of 444.00 from holding Manulife Financial Corp or generate 22.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Helium vs. Manulife Financial Corp
Performance |
| Timeline |
| Royal Helium |
| Manulife Financial Corp |
Royal Helium and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Helium and Manulife Financial
The main advantage of trading using opposite Royal Helium and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Helium 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.The idea behind Royal Helium and Manulife Financial Corp 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.| Manulife Financial vs. HPQ Silicon Resources | Manulife Financial vs. North American Financial | Manulife Financial vs. Rubicon Organics | Manulife Financial vs. High Liner Foods |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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