Correlation Between Pro-blend(r) Extended and Manning Napier

Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Extended and Manning Napier 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 Pro-blend(r) Extended and Manning Napier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pro Blend Extended Term and Manning Napier Callodine, you can compare the effects of market volatilities on Pro-blend(r) Extended and Manning Napier 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 Pro-blend(r) Extended with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Extended and Manning Napier.

Diversification Opportunities for Pro-blend(r) Extended and Manning Napier

0.06

Correlation Coefficient

Pro-blend(r) Extended  Manning Napier

Significant diversification

The 3 months correlation between Pro-blend(r) and Manning is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Extended Term and Manning Napier Callodine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Callodine and Pro-blend(r) Extended 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 Pro Blend Extended Term are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Callodine has no effect on the direction of Pro-blend(r) Extended i.e., Pro-blend(r) Extended and Manning Napier go up and down completely randomly.

Pair Corralation between Pro-blend(r) Extended and Manning Napier

Assuming the 90 days horizon Pro-blend(r) Extended is expected to generate 7.65 times less return on investment than Manning Napier. But when comparing it to its historical volatility, Pro Blend Extended Term is 2.28 times less risky than Manning Napier. It trades about 0.06 of its potential returns per unit of risk. Manning Napier Callodine is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,408  in Manning Napier Callodine on September 4, 2024 and sell it today you would earn a total of  157.00  from holding Manning Napier Callodine or generate 11.15% return on investment over 90 days.

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

Pro Blend Extended Term  vs.  Manning Napier Callodine

Pro-blend(r) Extended

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Extended Term are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pro-blend(r) Extended is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Manning Napier Callodine

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manning Napier Callodine are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Manning Napier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pro-blend(r) Extended and Manning Napier

The main advantage of trading using opposite Pro-blend(r) Extended and Manning Napier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Extended position performs unexpectedly, Manning Napier 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 Manning Napier will offset losses from the drop in Manning Napier's long position.

The idea behind Pro Blend Extended Term and Manning Napier Callodine 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.