Correlation Between Alexandria Real and Manulife Financial

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

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

Diversification Opportunities for Alexandria Real and Manulife Financial

-0.6

Correlation Coefficient

Alexandria Real  Manulife Financial

Excellent diversification

The 3 months correlation between Alexandria and Manulife is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial and Alexandria Real 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 Alexandria Real Estate 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 has no effect on the direction of Alexandria Real i.e., Alexandria Real and Manulife Financial go up and down completely randomly.

Pair Corralation between Alexandria Real and Manulife Financial

Considering the 90-day investment horizon Alexandria Real Estate is expected to under-perform the Manulife Financial. In addition to that, Alexandria Real is 6.84 times more volatile than Manulife Financial. It trades about -0.19 of its total potential returns per unit of risk. Manulife Financial is currently generating about 0.13 per unit of volatility. If you would invest  1,377  in Manulife Financial on September 14, 2024 and sell it today you would earn a total of  23.00  from holding Manulife Financial or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Alexandria Real Estate  vs.  Manulife Financial

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Manulife Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Manulife Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alexandria Real and Manulife Financial

The main advantage of trading using opposite Alexandria Real and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexandria Real 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 Alexandria Real Estate and Manulife Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.