Correlation Between Manulife Finl and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Manulife Finl and Bank of Montreal 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 Finl and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Finl Srs and Bank of Montreal, you can compare the effects of market volatilities on Manulife Finl and Bank of Montreal 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 Finl with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Finl and Bank of Montreal.
Diversification Opportunities for Manulife Finl and Bank of Montreal
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Manulife and Bank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Finl Srs and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and Manulife Finl 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 Finl Srs are associated (or correlated) with Bank of Montreal. 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 Montreal has no effect on the direction of Manulife Finl i.e., Manulife Finl and Bank of Montreal go up and down completely randomly.
Pair Corralation between Manulife Finl and Bank of Montreal
Assuming the 90 days trading horizon Manulife Finl Srs is expected to under-perform the Bank of Montreal. In addition to that, Manulife Finl is 1.02 times more volatile than Bank of Montreal. It trades about -0.24 of its total potential returns per unit of risk. Bank of Montreal is currently generating about -0.07 per unit of volatility. If you would invest 12,996 in Bank of Montreal on January 25, 2024 and sell it today you would lose (185.00) from holding Bank of Montreal or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Finl Srs vs. Bank of Montreal
Performance |
| Timeline |
| Manulife Finl Srs |
| Bank of Montreal |
Manulife Finl and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Finl and Bank of Montreal
The main advantage of trading using opposite Manulife Finl and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Finl position performs unexpectedly, Bank of Montreal 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 Montreal will offset losses from the drop in Bank of Montreal's long position.The idea behind Manulife Finl Srs and Bank of Montreal 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.| Bank of Montreal vs. Royal Bank of | Bank of Montreal vs. Canadian Imperial Bank | Bank of Montreal vs. Bank of Nova | Bank of Montreal vs. Toronto Dominion Bank |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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