Correlation Between Manulife Financial and Star Diamond

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

Diversification Opportunities for Manulife Financial and Star Diamond

-0.03

Correlation Coefficient

Manulife Financial  Star Diamond

Good diversification

The 3 months correlation between Manulife and Star is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Star Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Diamond Corp 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 Star Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Diamond Corp has no effect on the direction of Manulife Financial i.e., Manulife Financial and Star Diamond go up and down completely randomly.

Pair Corralation between Manulife Financial and Star Diamond

Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 0.14 times more return on investment than Star Diamond. However, Manulife Financial Corp is 7.21 times less risky than Star Diamond. It trades about 0.12 of its potential returns per unit of risk. Star Diamond Corp is currently generating about -0.01 per unit of risk. If you would invest  1,697  in Manulife Financial Corp on May 28, 2025 and sell it today you would earn a total of  123.00  from holding Manulife Financial Corp or generate 7.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Manulife Financial Corp  vs.  Star Diamond Corp

Manulife Financial Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Star Diamond Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Star Diamond Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Star Diamond is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Manulife Financial and Star Diamond

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

The idea behind Manulife Financial Corp and Star Diamond 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.