Correlation Between Manulife Financial and Mainstay Epoch

Can any of the company-specific risk be diversified away by investing in both Manulife Financial and Mainstay Epoch 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 Mainstay Epoch 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 Mainstay Epoch Global, you can compare the effects of market volatilities on Manulife Financial and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Mainstay Epoch.

Diversification Opportunities for Manulife Financial and Mainstay Epoch

0.79

Correlation Coefficient

Manulife Financial  Mainstay Epoch

Poor diversification

The 3 months correlation between Manulife and Mainstay is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Mainstay Epoch Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Global 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Global has no effect on the direction of Manulife Financial i.e., Manulife Financial and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Manulife Financial and Mainstay Epoch

If you would invest  2,157  in Mainstay Epoch Global on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Mainstay Epoch Global or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Manulife Financial Corp  vs.  Mainstay Epoch Global

Manulife Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Mainstay Epoch Global

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Mainstay Epoch Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Mainstay Epoch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Manulife Financial and Mainstay Epoch

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

The idea behind Manulife Financial Corp and Mainstay Epoch Global 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.