Correlation Between Manulife Multifactor and Global X

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

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

Diversification Opportunities for Manulife Multifactor and Global X

0.72

Correlation Coefficient

Manulife Multifactor  Global X

Poor diversification

The 3 months correlation between Manulife and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Mid and Global X SPTSX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SPTSX and Manulife Multifactor 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 Multifactor Mid are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SPTSX has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and Global X go up and down completely randomly.

Pair Corralation between Manulife Multifactor and Global X

Assuming the 90 days trading horizon Manulife Multifactor Mid is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Manulife Multifactor Mid is 1.01 times less risky than Global X. The etf trades about -0.26 of its potential returns per unit of risk. The Global X SPTSX is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,650  in Global X SPTSX on September 26, 2024 and sell it today you would lose (150.00) from holding Global X SPTSX or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Manulife Multifactor Mid  vs.  Global X SPTSX

Manulife Multifactor Mid

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Manulife Multifactor is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X SPTSX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SPTSX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Manulife Multifactor and Global X

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

The idea behind Manulife Multifactor Mid and Global X SPTSX 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.