Correlation Between NeXGold Mining and Manulife Financial

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

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

Diversification Opportunities for NeXGold Mining and Manulife Financial

0.05

Correlation Coefficient

NeXGold Mining  Manulife Financial

Significant diversification

The 3 months correlation between NeXGold and Manulife is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining 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 NeXGold Mining 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 NeXGold Mining 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 NeXGold Mining i.e., NeXGold Mining and Manulife Financial go up and down completely randomly.

Pair Corralation between NeXGold Mining and Manulife Financial

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the Manulife Financial. In addition to that, NeXGold Mining is 5.01 times more volatile than Manulife Financial Corp. It trades about -0.04 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.11 per unit of volatility. If you would invest  2,198  in Manulife Financial Corp on September 4, 2024 and sell it today you would lose (116.00) from holding Manulife Financial Corp or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

NeXGold Mining Corp  vs.  Manulife Financial Corp

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NeXGold Mining and Manulife Financial

The main advantage of trading using opposite NeXGold Mining and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeXGold Mining 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 NeXGold Mining 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.