Correlation Between Manulife Multifactor and CI MidCap

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

Diversification Opportunities for Manulife Multifactor and CI MidCap

0.98

Correlation Coefficient

Manulife Multifactor  CI MidCap

Almost no diversification

The 3 months correlation between Manulife and UMI is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Multifactor Mid and CI MidCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI MidCap Dividend 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 CI MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI MidCap Dividend has no effect on the direction of Manulife Multifactor i.e., Manulife Multifactor and CI MidCap go up and down completely randomly.

Pair Corralation between Manulife Multifactor and CI MidCap

Assuming the 90 days trading horizon Manulife Multifactor is expected to generate 1.07 times less return on investment than CI MidCap. But when comparing it to its historical volatility, Manulife Multifactor Mid is 1.08 times less risky than CI MidCap. It trades about 0.14 of its potential returns per unit of risk. CI MidCap Dividend is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,290  in CI MidCap Dividend on September 16, 2024 and sell it today you would earn a total of  258.00  from holding CI MidCap Dividend or generate 7.84% return on investment over 90 days.

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

Manulife Multifactor Mid  vs.  CI MidCap Dividend

Manulife Multifactor Mid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Multifactor Mid are ranked lower than 11 (%) 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.

CI MidCap Dividend

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI MidCap Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, CI MidCap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Manulife Multifactor and CI MidCap

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

The idea behind Manulife Multifactor Mid and CI MidCap Dividend 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.