Correlation Between Suncor Energy and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Suncor Energy 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 Suncor Energy and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Manulife Financial Corp, you can compare the effects of market volatilities on Suncor Energy 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 Suncor Energy with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Manulife Financial.
Diversification Opportunities for Suncor Energy and Manulife Financial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suncor and Manulife is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy 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 Suncor Energy 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 Suncor Energy 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 Suncor Energy i.e., Suncor Energy and Manulife Financial go up and down completely randomly.
Pair Corralation between Suncor Energy and Manulife Financial
Assuming the 90 days horizon Suncor Energy is expected to generate 1.01 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, Suncor Energy is 1.17 times less risky than Manulife Financial. It trades about 0.3 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,175 in Manulife Financial Corp on August 27, 2024 and sell it today you would earn a total of 362.00 from holding Manulife Financial Corp or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. Manulife Financial Corp
Performance |
| Timeline |
| Suncor Energy |
| Manulife Financial Corp |
Suncor Energy and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Manulife Financial
The main advantage of trading using opposite Suncor Energy and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy 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.| Suncor Energy vs. Enbridge Pref 5 | Suncor Energy vs. Enbridge Pref 11 | Suncor Energy vs. Enbridge Pref L | Suncor Energy vs. E Split Corp |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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