Correlation Between InPlay Oil and Manulife Financial

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

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

Diversification Opportunities for InPlay Oil and Manulife Financial

0.4

Correlation Coefficient

InPlay Oil  Manulife Financial

Very weak diversification

The 3 months correlation between InPlay and Manulife is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Manulife Financial go up and down completely randomly.

Pair Corralation between InPlay Oil and Manulife Financial

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Manulife Financial. In addition to that, InPlay Oil is 2.47 times more volatile than Manulife Financial Corp. It trades about -0.15 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.03 per unit of volatility. If you would invest  2,139  in Manulife Financial Corp on September 12, 2024 and sell it today you would lose (37.00) from holding Manulife Financial Corp or give up 1.73% of portfolio value over 90 days.

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

InPlay Oil Corp  vs.  Manulife Financial Corp

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Manulife Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InPlay Oil and Manulife Financial

The main advantage of trading using opposite InPlay Oil and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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 InPlay Oil Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.