Correlation Between Western Investment and Manulife Financial

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

By analyzing existing cross correlation between Western Investment and Manulife Financial Corp, you can compare the effects of market volatilities on Western Investment and Manulife Financial 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 Western Investment with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Manulife Financial.

Diversification Opportunities for Western Investment and Manulife Financial

0.63

Correlation Coefficient

Western Investment  Manulife Financial

Poor diversification

The 3 months correlation between Western and Manulife is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and Western Investment 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 Western Investment are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Western Investment i.e., Western Investment and Manulife Financial go up and down completely randomly.

Pair Corralation between Western Investment and Manulife Financial

Given the investment horizon of 90 days Western Investment is expected to generate 1.16 times less return on investment than Manulife Financial. In addition to that, Western Investment is 3.56 times more volatile than Manulife Financial Corp. It trades about 0.07 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.3 per unit of volatility. If you would invest  1,574  in Manulife Financial Corp on May 6, 2025 and sell it today you would earn a total of  293.00  from holding Manulife Financial Corp or generate 18.61% return on investment over 90 days.

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

Western Investment  vs.  Manulife Financial Corp

Western Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, Manulife Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Investment and Manulife Financial

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

The idea behind Western Investment and Manulife Financial 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.