Correlation Between Dynamic Active and Manulife Multifactor

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

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

Diversification Opportunities for Dynamic Active and Manulife Multifactor

0.96

Correlation Coefficient

Dynamic Active  Manulife Multifactor

Almost no diversification

The 3 months correlation between Dynamic and Manulife is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Canadian and Manulife Multifactor Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor Mid and Dynamic Active 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 Dynamic Active Canadian 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 Mid has no effect on the direction of Dynamic Active i.e., Dynamic Active and Manulife Multifactor go up and down completely randomly.

Pair Corralation between Dynamic Active and Manulife Multifactor

Assuming the 90 days trading horizon Dynamic Active is expected to generate 1.51 times less return on investment than Manulife Multifactor. But when comparing it to its historical volatility, Dynamic Active Canadian is 2.35 times less risky than Manulife Multifactor. It trades about 0.37 of its potential returns per unit of risk. Manulife Multifactor Mid is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,961  in Manulife Multifactor Mid on April 23, 2025 and sell it today you would earn a total of  590.00  from holding Manulife Multifactor Mid or generate 14.9% return on investment over 90 days.

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

Dynamic Active Canadian  vs.  Manulife Multifactor Mid

Dynamic Active Canadian

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Canadian are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Dynamic Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Manulife Multifactor Mid

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Manulife Multifactor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynamic Active and Manulife Multifactor

The main advantage of trading using opposite Dynamic Active and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active 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.

The idea behind Dynamic Active Canadian and Manulife Multifactor Mid 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.