Correlation Between Rubicon Organics and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Rubicon Organics 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 Rubicon Organics and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rubicon Organics and Manulife Financial Corp, you can compare the effects of market volatilities on Rubicon Organics 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 Rubicon Organics with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubicon Organics and Manulife Financial.
Diversification Opportunities for Rubicon Organics and Manulife Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rubicon and Manulife is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics i.e., Rubicon Organics and Manulife Financial go up and down completely randomly.
Pair Corralation between Rubicon Organics and Manulife Financial
Assuming the 90 days trading horizon Rubicon Organics is expected to under-perform the Manulife Financial. In addition to that, Rubicon Organics is 9.1 times more volatile than Manulife Financial Corp. It trades about -0.1 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 2,474 in Manulife Financial Corp on September 3, 2024 and sell it today you would lose (60.00) from holding Manulife Financial Corp or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rubicon Organics vs. Manulife Financial Corp
Performance |
| Timeline |
| Rubicon Organics |
| Manulife Financial Corp |
Rubicon Organics and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rubicon Organics and Manulife Financial
The main advantage of trading using opposite Rubicon Organics and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics 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 Rubicon Organics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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