Correlation Between Manulife Financial and Supremex

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

Diversification Opportunities for Manulife Financial and Supremex

-0.46

Correlation Coefficient

Manulife Financial  Supremex

Very good diversification

The 3 months correlation between Manulife and Supremex is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and Supremex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supremex 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 Supremex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supremex has no effect on the direction of Manulife Financial i.e., Manulife Financial and Supremex go up and down completely randomly.

Pair Corralation between Manulife Financial and Supremex

Assuming the 90 days trading horizon Manulife Financial Corp is expected to under-perform the Supremex. But the stock apears to be less risky and, when comparing its historical volatility, Manulife Financial Corp is 1.92 times less risky than Supremex. The stock trades about -0.05 of its potential returns per unit of risk. The Supremex is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  375.00  in Supremex on May 17, 2025 and sell it today you would earn a total of  54.00  from holding Supremex or generate 14.4% return on investment over 90 days.

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

Manulife Financial Corp  vs.  Supremex

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.

Supremex

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Supremex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Supremex displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manulife Financial and Supremex

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

The idea behind Manulife Financial Corp and Supremex 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.