Correlation Between Manulife Financial and Exchange Income

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

Diversification Opportunities for Manulife Financial and Exchange Income

-0.62

Correlation Coefficient

Manulife Financial  Exchange Income

Excellent diversification

The 3 months correlation between Manulife and Exchange is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income 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 Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Manulife Financial i.e., Manulife Financial and Exchange Income go up and down completely randomly.

Pair Corralation between Manulife Financial and Exchange Income

Assuming the 90 days trading horizon Manulife Financial Corp is expected to under-perform the Exchange Income. But the stock apears to be less risky and, when comparing its historical volatility, Manulife Financial Corp is 1.2 times less risky than Exchange Income. The stock trades about -0.06 of its potential returns per unit of risk. The Exchange Income is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  5,691  in Exchange Income on May 27, 2025 and sell it today you would earn a total of  1,598  from holding Exchange Income or generate 28.08% return on investment over 90 days.

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

Manulife Financial Corp  vs.  Exchange Income

Manulife Financial Corp

Risk-Adjusted Performance

Weakest

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

Exchange Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exchange Income displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Financial and Exchange Income

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

The idea behind Manulife Financial Corp and Exchange Income 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.