Correlation Between Purpose Bitcoin and Manulife Multifactor

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

By analyzing existing cross correlation between Purpose Bitcoin CAD and Manulife Multifactor Large, you can compare the effects of market volatilities on Purpose Bitcoin and Manulife Multifactor 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 Purpose Bitcoin with a short position of Manulife Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Bitcoin and Manulife Multifactor.

Diversification Opportunities for Purpose Bitcoin and Manulife Multifactor

0.89

Correlation Coefficient

Purpose Bitcoin  Manulife Multifactor

Very poor diversification

The 3 months correlation between Purpose and Manulife is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Bitcoin CAD and Manulife Multifactor Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Multifactor and Purpose Bitcoin 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 Purpose Bitcoin CAD are associated (or correlated) with Manulife Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Multifactor has no effect on the direction of Purpose Bitcoin i.e., Purpose Bitcoin and Manulife Multifactor go up and down completely randomly.

Pair Corralation between Purpose Bitcoin and Manulife Multifactor

Assuming the 90 days trading horizon Purpose Bitcoin CAD is expected to generate 5.44 times more return on investment than Manulife Multifactor. However, Purpose Bitcoin is 5.44 times more volatile than Manulife Multifactor Large. It trades about 0.25 of its potential returns per unit of risk. Manulife Multifactor Large is currently generating about 0.21 per unit of risk. If you would invest  1,090  in Purpose Bitcoin CAD on September 12, 2024 and sell it today you would earn a total of  708.00  from holding Purpose Bitcoin CAD or generate 64.95% return on investment over 90 days.

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

Purpose Bitcoin CAD  vs.  Manulife Multifactor Large

Purpose Bitcoin CAD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Bitcoin CAD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Purpose Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Multifactor

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Large are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Manulife Multifactor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Purpose Bitcoin and Manulife Multifactor

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

The idea behind Purpose Bitcoin CAD and Manulife Multifactor Large 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..