Correlation Between Manulife Financial and Information Services

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

Diversification Opportunities for Manulife Financial and Information Services

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Manulife and Information is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Manulife Financial i.e., Manulife Financial and Information Services go up and down completely randomly.

Pair Corralation between Manulife Financial and Information Services

Assuming the 90 days trading horizon Manulife Financial is expected to generate 1.22 times less return on investment than Information Services. But when comparing it to its historical volatility, Manulife Financial Corp is 2.4 times less risky than Information Services. It trades about 0.45 of its potential returns per unit of risk. Information Services is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,651  in Information Services on April 28, 2025 and sell it today you would earn a total of  564.00  from holding Information Services or generate 21.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Manulife Financial Corp  vs.  Information Services

 Performance 
       Timeline  
Manulife Financial Corp 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Manulife Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
Information Services 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Information Services displayed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Financial and Information Services Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Manulife Financial and Information Services

The main advantage of trading using opposite Manulife Financial and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.
The idea behind Manulife Financial Corp and Information Services 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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