Correlation Between Manulife Financial and Bank of the

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

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

Diversification Opportunities for Manulife Financial and Bank of the

-0.02

Correlation Coefficient

Manulife Financial  Bank of the

Good diversification

The 3 months correlation between Manulife and Bank is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Manulife Financial 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 Financial Corp are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Manulife Financial i.e., Manulife Financial and Bank of the go up and down completely randomly.

Pair Corralation between Manulife Financial and Bank of the

Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.96 times more return on investment than Bank of the. However, Manulife Financial is 1.96 times more volatile than Bank of the. It trades about 0.06 of its potential returns per unit of risk. Bank of the is currently generating about -0.07 per unit of risk. If you would invest  151,572  in Manulife Financial Corp on April 21, 2025 and sell it today you would earn a total of  10,428  from holding Manulife Financial Corp or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.81%
Values	Daily Returns

Manulife Financial Corp  vs.  Bank of the

Manulife Financial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Manulife Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Manulife Financial and Bank of the

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

The idea behind Manulife Financial Corp and Bank of the 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.