Correlation Between Manulife Smart and BMO Canadian

Can any of the company-specific risk be diversified away by investing in both Manulife Smart and BMO Canadian 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 Manulife Smart and BMO Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Manulife Smart Dividend and BMO Canadian High, you can compare the effects of market volatilities on Manulife Smart and BMO Canadian 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 Manulife Smart with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Smart and BMO Canadian.

Diversification Opportunities for Manulife Smart and BMO Canadian

0.98

Correlation Coefficient

Manulife Smart  BMO Canadian

Almost no diversification

The 3 months correlation between Manulife and BMO is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Smart Dividend and BMO Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian High and Manulife Smart 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 Manulife Smart Dividend are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian High has no effect on the direction of Manulife Smart i.e., Manulife Smart and BMO Canadian go up and down completely randomly.

Pair Corralation between Manulife Smart and BMO Canadian

Assuming the 90 days trading horizon Manulife Smart Dividend is expected to generate 1.15 times more return on investment than BMO Canadian. However, Manulife Smart is 1.15 times more volatile than BMO Canadian High. It trades about 0.49 of its potential returns per unit of risk. BMO Canadian High is currently generating about 0.44 per unit of risk. If you would invest  1,454  in Manulife Smart Dividend on April 20, 2025 and sell it today you would earn a total of  176.00  from holding Manulife Smart Dividend or generate 12.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Manulife Smart Dividend  vs.  BMO Canadian High

Manulife Smart Dividend

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Smart Dividend are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Manulife Smart may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BMO Canadian High

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Canadian High are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BMO Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Manulife Smart and BMO Canadian

The main advantage of trading using opposite Manulife Smart and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Smart position performs unexpectedly, BMO Canadian 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 BMO Canadian will offset losses from the drop in BMO Canadian's long position.

The idea behind Manulife Smart Dividend and BMO Canadian High 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.