Correlation Between TD Equity and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both TD Equity and Manulife Multifactor 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 TD Equity and Manulife Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Equity Index and Manulife Multifactor Developed, you can compare the effects of market volatilities on TD Equity and Manulife Multifactor 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 TD Equity with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Equity and Manulife Multifactor.
Diversification Opportunities for TD Equity and Manulife Multifactor
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPU and Manulife is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TD Equity Index and Manulife Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and TD Equity 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 TD Equity Index are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of TD Equity i.e., TD Equity and Manulife Multifactor go up and down completely randomly.
Pair Corralation between TD Equity and Manulife Multifactor
Assuming the 90 days trading horizon TD Equity is expected to generate 7.28 times less return on investment than Manulife Multifactor. In addition to that, TD Equity is 2.05 times more volatile than Manulife Multifactor Developed. It trades about 0.02 of its total potential returns per unit of risk. Manulife Multifactor Developed is currently generating about 0.3 per unit of volatility. If you would invest 3,780 in Manulife Multifactor Developed on October 25, 2024 and sell it today you would earn a total of 102.00 from holding Manulife Multifactor Developed or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TD Equity Index vs. Manulife Multifactor Developed
Performance |
| Timeline |
| TD Equity Index |
| Manulife Multifactor |
TD Equity and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Equity and Manulife Multifactor
The main advantage of trading using opposite TD Equity and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Equity position performs unexpectedly, Manulife Multifactor 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 Multifactor will offset losses from the drop in Manulife Multifactor's long position.| TD Equity vs. TD Canadian Equity | TD Equity vs. TD International Equity | TD Equity vs. TD Equity CAD | TD Equity vs. TD Canadian Aggregate |
| Manulife Multifactor vs. Manulife Multifactor Large | Manulife Multifactor vs. Manulife Multifactor Mid | Manulife Multifactor vs. Manulife Multifactor Canadian | Manulife Multifactor vs. Mackenzie Core Plus |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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