Correlation Between Vanguard FTSE and Manulife Multifactor
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 Vanguard FTSE and Manulife Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Canada and Manulife Multifactor Canadian, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Manulife Multifactor.
Diversification Opportunities for Vanguard FTSE and Manulife Multifactor
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Manulife is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and Manulife Multifactor Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and Vanguard FTSE 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 Vanguard FTSE Canada 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 Vanguard FTSE i.e., Vanguard FTSE and Manulife Multifactor go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Manulife Multifactor
Assuming the 90 days trading horizon Vanguard FTSE Canada is expected to generate 0.94 times more return on investment than Manulife Multifactor. However, Vanguard FTSE Canada is 1.07 times less risky than Manulife Multifactor. It trades about 0.6 of its potential returns per unit of risk. Manulife Multifactor Canadian is currently generating about 0.54 per unit of risk. If you would invest 4,953 in Vanguard FTSE Canada on September 4, 2024 and sell it today you would earn a total of 299.00 from holding Vanguard FTSE Canada or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Canada vs. Manulife Multifactor Canadian
Performance |
| Timeline |
| Vanguard FTSE Canada |
| Manulife Multifactor |
Vanguard FTSE and Manulife Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Manulife Multifactor
The main advantage of trading using opposite Vanguard FTSE and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.| Vanguard FTSE vs. iShares Core MSCI | Vanguard FTSE vs. Vanguard Total Market | Vanguard FTSE vs. iShares Core SP | Vanguard FTSE vs. Vanguard Canadian Aggregate |
| Manulife Multifactor vs. Mackenzie Large Cap | Manulife Multifactor vs. Goldman Sachs ActiveBeta | Manulife Multifactor vs. BMO MSCI EAFE | Manulife Multifactor vs. BMO Long Federal |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |