Correlation Between E L and Manulife Financial

Can any of the company-specific risk be diversified away by investing in both E L and Manulife Financial 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 E L and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E L Financial 3 and Manulife Financial Corp, you can compare the effects of market volatilities on E L and Manulife Financial 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 E L with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Manulife Financial.

Diversification Opportunities for E L and Manulife Financial

0.65

Correlation Coefficient

E L  Manulife Financial

Poor diversification

The 3 months correlation between ELF-PH and Manulife is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and E L 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 E L Financial 3 are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of E L i.e., E L and Manulife Financial go up and down completely randomly.

Pair Corralation between E L and Manulife Financial

Assuming the 90 days trading horizon E L is expected to generate 1.37 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, E L Financial 3 is 1.74 times less risky than Manulife Financial. It trades about 0.25 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,225  in Manulife Financial Corp on May 27, 2025 and sell it today you would earn a total of  155.00  from holding Manulife Financial Corp or generate 6.97% return on investment over 90 days.

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

E L Financial 3  vs.  Manulife Financial Corp

E L Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial 3 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, E L is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Manulife Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with E L and Manulife Financial

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

The idea behind E L Financial 3 and Manulife Financial Corp 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.