Correlation Between Manulife Financial and Zebra Technologies

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

Diversification Opportunities for Manulife Financial and Zebra Technologies

0.89

Correlation Coefficient

Manulife Financial  Zebra Technologies

Very poor diversification

The 3 months correlation between Manulife and Zebra is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies 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 Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Manulife Financial i.e., Manulife Financial and Zebra Technologies go up and down completely randomly.

Pair Corralation between Manulife Financial and Zebra Technologies

Considering the 90-day investment horizon Manulife Financial Corp is expected to under-perform the Zebra Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Manulife Financial Corp is 1.59 times less risky than Zebra Technologies. The stock trades about -0.22 of its potential returns per unit of risk. The Zebra Technologies is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  28,519  in Zebra Technologies on January 19, 2024 and sell it today you would lose (1,216) from holding Zebra Technologies or give up 4.26% of portfolio value over 90 days.

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

Manulife Financial Corp  vs.  Zebra Technologies

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.

Zebra Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zebra Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Zebra Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Manulife Financial and Zebra Technologies

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

The idea behind Manulife Financial Corp and Zebra Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.