Correlation Between Stampede Drilling and Manulife Finl

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

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

Diversification Opportunities for Stampede Drilling and Manulife Finl

0.43

Correlation Coefficient

Stampede Drilling  Manulife Finl

Very weak diversification

The 3 months correlation between Stampede and Manulife is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs and Stampede Drilling 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 Stampede Drilling are associated (or correlated) with Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Manulife Finl go up and down completely randomly.

Pair Corralation between Stampede Drilling and Manulife Finl

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Manulife Finl. In addition to that, Stampede Drilling is 7.04 times more volatile than Manulife Finl Srs. It trades about -0.02 of its total potential returns per unit of risk. Manulife Finl Srs is currently generating about -0.11 per unit of volatility. If you would invest  2,021  in Manulife Finl Srs on August 31, 2024 and sell it today you would lose (76.00) from holding Manulife Finl Srs or give up 3.76% of portfolio value over 90 days.

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

Stampede Drilling  vs.  Manulife Finl Srs

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stampede Drilling is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Manulife Finl Srs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Finl Srs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Finl is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stampede Drilling and Manulife Finl

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

The idea behind Stampede Drilling and Manulife Finl Srs 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.