Correlation Between Manulife Financial and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Manulife Financial 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 Financial 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 Financial Corp and Bank of Montreal, you can compare the effects of market volatilities on Manulife Financial 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 Financial with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Bank of Montreal.
Diversification Opportunities for Manulife Financial and Bank of Montreal
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Manulife and Bank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp 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 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 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 Financial i.e., Manulife Financial and Bank of Montreal go up and down completely randomly.
Pair Corralation between Manulife Financial and Bank of Montreal
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.05 times more return on investment than Bank of Montreal. However, Manulife Financial is 1.05 times more volatile than Bank of Montreal. It trades about 0.08 of its potential returns per unit of risk. Bank of Montreal is currently generating about 0.03 per unit of risk. If you would invest 2,115 in Manulife Financial Corp on January 25, 2024 and sell it today you would earn a total of 1,100 from holding Manulife Financial Corp or generate 52.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Financial Corp vs. Bank of Montreal
Performance |
| Timeline |
| Manulife Financial Corp |
| Bank of Montreal |
Manulife Financial and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Bank of Montreal
The main advantage of trading using opposite Manulife Financial and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial 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.| Manulife Financial vs. Element Fleet Management | Manulife Financial vs. Martinrea International | Manulife Financial vs. Mullen Group |
| Bank of Montreal vs. Element Fleet Management | Bank of Montreal vs. Martinrea International | Bank of Montreal vs. Mullen Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |