Correlation Between Manulife Financial and BlackBerry

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

Diversification Opportunities for Manulife Financial and BlackBerry

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Manulife and BlackBerry is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry 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 BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Manulife Financial i.e., Manulife Financial and BlackBerry go up and down completely randomly.

Pair Corralation between Manulife Financial and BlackBerry

Considering the 90-day investment horizon Manulife Financial Corp is expected to generate 0.51 times more return on investment than BlackBerry. However, Manulife Financial Corp is 1.96 times less risky than BlackBerry. It trades about 0.18 of its potential returns per unit of risk. BlackBerry is currently generating about 0.01 per unit of risk. If you would invest  1,556  in Manulife Financial Corp on September 9, 2022 and sell it today you would earn a total of  216.00  from holding Manulife Financial Corp or generate 13.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Manulife Financial Corp  vs.  BlackBerry

 Performance (%) 
       Timeline  
Manulife Financial Corp 
Manulife Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Manulife Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Manulife Price Channel

BlackBerry 
BlackBerry Performance
0 of 100
Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

BlackBerry Price Channel

Manulife Financial and BlackBerry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Manulife Financial and BlackBerry

The main advantage of trading using opposite Manulife Financial and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.
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The idea behind Manulife Financial Corp and BlackBerry 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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