Correlation Between TD Canadian and Manulife Multifactor

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

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

Diversification Opportunities for TD Canadian and Manulife Multifactor

1.0

Correlation Coefficient

TD Canadian  Manulife Multifactor

No risk reduction

The 3 months correlation between TTP and Manulife is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Equity and Manulife Multifactor Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and TD Canadian 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 TD Canadian Equity 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 TD Canadian i.e., TD Canadian and Manulife Multifactor go up and down completely randomly.

Pair Corralation between TD Canadian and Manulife Multifactor

Assuming the 90 days trading horizon TD Canadian Equity is expected to generate 1.08 times more return on investment than Manulife Multifactor. However, TD Canadian is 1.08 times more volatile than Manulife Multifactor Canadian. It trades about 0.45 of its potential returns per unit of risk. Manulife Multifactor Canadian is currently generating about 0.45 per unit of risk. If you would invest  2,815  in TD Canadian Equity on April 24, 2025 and sell it today you would earn a total of  327.00  from holding TD Canadian Equity or generate 11.62% return on investment over 90 days.

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

TD Canadian Equity  vs.  Manulife Multifactor Canadian

TD Canadian Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TD Canadian Equity are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, TD Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Manulife Multifactor

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Canadian are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Manulife Multifactor may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TD Canadian and Manulife Multifactor

The main advantage of trading using opposite TD Canadian and Manulife Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Canadian 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 TD Canadian Equity and Manulife Multifactor Canadian 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.