Correlation Between Manulife Fundamental and Fidelity Canadian

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

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

Diversification Opportunities for Manulife Fundamental and Fidelity Canadian

0.05

Correlation Coefficient

Manulife Fundamental  Fidelity Canadian

Significant diversification

The 3 months correlation between Manulife and Fidelity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Fundamental Equity and Fidelity Canadian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian Growth and Manulife Fundamental 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 Fundamental Equity are associated (or correlated) with Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian Growth has no effect on the direction of Manulife Fundamental i.e., Manulife Fundamental and Fidelity Canadian go up and down completely randomly.

Pair Corralation between Manulife Fundamental and Fidelity Canadian

Assuming the 90 days trading horizon Manulife Fundamental is expected to generate 2.26 times less return on investment than Fidelity Canadian. But when comparing it to its historical volatility, Manulife Fundamental Equity is 2.13 times less risky than Fidelity Canadian. It trades about 0.12 of its potential returns per unit of risk. Fidelity Canadian Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,981  in Fidelity Canadian Growth on April 20, 2025 and sell it today you would earn a total of  1,289  from holding Fidelity Canadian Growth or generate 12.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	48.19%
Values	Daily Returns

Manulife Fundamental Equity  vs.  Fidelity Canadian Growth

Manulife Fundamental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Fundamental Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Manulife Fundamental is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Fidelity Canadian Growth

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canadian Growth are ranked lower than 38 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, Fidelity Canadian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Fundamental and Fidelity Canadian

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

The idea behind Manulife Fundamental Equity and Fidelity Canadian Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.