Correlation Between Manulife Financial and HPQ Silicon

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

Diversification Opportunities for Manulife Financial and HPQ Silicon

0.14

Correlation Coefficient

Manulife Financial  HPQ Silicon

Average diversification

The 3 months correlation between Manulife and HPQ is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and HPQ Silicon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPQ Silicon Resources 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 HPQ Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPQ Silicon Resources has no effect on the direction of Manulife Financial i.e., Manulife Financial and HPQ Silicon go up and down completely randomly.

Pair Corralation between Manulife Financial and HPQ Silicon

Assuming the 90 days trading horizon Manulife Financial is expected to generate 1.77 times less return on investment than HPQ Silicon. But when comparing it to its historical volatility, Manulife Financial Corp is 3.47 times less risky than HPQ Silicon. It trades about 0.08 of its potential returns per unit of risk. HPQ Silicon Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21.00  in HPQ Silicon Resources on September 13, 2024 and sell it today you would earn a total of  5.00  from holding HPQ Silicon Resources or generate 23.81% return on investment over 90 days.

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

Manulife Financial Corp  vs.  HPQ Silicon Resources

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 latest stock price disturbance, may contribute to short-term losses for the investors.

HPQ Silicon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPQ Silicon Resources 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Manulife Financial and HPQ Silicon

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

The idea behind Manulife Financial Corp and HPQ Silicon Resources 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.