Correlation Between Manulife Finl and First Capital

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

By analyzing existing cross correlation between Manulife Finl Srs and First Capital Real, you can compare the effects of market volatilities on Manulife Finl and First Capital 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 Finl with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Finl and First Capital.

Diversification Opportunities for Manulife Finl and First Capital

0.79

Correlation Coefficient

Manulife Finl  First Capital

Poor diversification

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

Pair Corralation between Manulife Finl and First Capital

Assuming the 90 days trading horizon Manulife Finl is expected to generate 1.14 times less return on investment than First Capital. But when comparing it to its historical volatility, Manulife Finl Srs is 1.9 times less risky than First Capital. It trades about 0.31 of its potential returns per unit of risk. First Capital Real is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,663  in First Capital Real on April 29, 2025 and sell it today you would earn a total of  197.00  from holding First Capital Real or generate 11.85% return on investment over 90 days.

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

Manulife Finl Srs  vs.  First Capital Real

Manulife Finl Srs

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Finl Srs are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Manulife Finl may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Capital Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital Real are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Manulife Finl and First Capital

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

The idea behind Manulife Finl Srs and First Capital Real 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.