Correlation Between Roots Corp and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Roots Corp 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 Roots Corp and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roots Corp and Manulife Financial Corp, you can compare the effects of market volatilities on Roots Corp 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 Roots Corp with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roots Corp and Manulife Financial.
Diversification Opportunities for Roots Corp and Manulife Financial
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roots and Manulife is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Roots Corp 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 Roots Corp 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 Roots Corp 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 Roots Corp i.e., Roots Corp and Manulife Financial go up and down completely randomly.
Pair Corralation between Roots Corp and Manulife Financial
Assuming the 90 days trading horizon Roots Corp is expected to under-perform the Manulife Financial. In addition to that, Roots Corp is 2.13 times more volatile than Manulife Financial Corp. It trades about -0.01 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.08 per unit of volatility. If you would invest 1,526 in Manulife Financial Corp on September 4, 2024 and sell it today you would earn a total of 739.00 from holding Manulife Financial Corp or generate 48.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roots Corp vs. Manulife Financial Corp
Performance |
| Timeline |
| Roots Corp |
| Manulife Financial Corp |
Roots Corp and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roots Corp and Manulife Financial
The main advantage of trading using opposite Roots Corp and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roots Corp 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 Roots Corp 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. Bank of Nova | Manulife Financial vs. Financial 15 Split | Manulife Financial vs. Canadian Imperial Bank | Manulife Financial vs. CI Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |