Correlation Between Manulife Financial and Kimberly Clark

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

Diversification Opportunities for Manulife Financial and Kimberly Clark

0.09

Correlation Coefficient

Manulife Financial  Kimberly Clark

Significant diversification

The 3 months correlation between Manulife and Kimberly is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Manulife Financial i.e., Manulife Financial and Kimberly Clark go up and down completely randomly.

Pair Corralation between Manulife Financial and Kimberly Clark

Considering the 90-day investment horizon Manulife Financial Corp is expected to under-perform the Kimberly Clark. In addition to that, Manulife Financial is 1.41 times more volatile than Kimberly Clark de Mxico. It trades about -0.24 of its total potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about 0.18 per unit of volatility. If you would invest  227.00  in Kimberly Clark de Mxico on January 20, 2024 and sell it today you would earn a total of  7.00  from holding Kimberly Clark de Mxico or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Manulife Financial Corp  vs.  Kimberly Clark de Mxico

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.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Kimberly Clark is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Manulife Financial and Kimberly Clark

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

The idea behind Manulife Financial Corp and Kimberly Clark de Mxico 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.