Correlation Between Morningstar Aggressive and John Hancock
Can any of the company-specific risk be diversified away by investing in both Morningstar Aggressive and John Hancock 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 Morningstar Aggressive and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morningstar Aggressive Growth and John Hancock Mid, you can compare the effects of market volatilities on Morningstar Aggressive and John Hancock 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 Morningstar Aggressive with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Aggressive and John Hancock.
Diversification Opportunities for Morningstar Aggressive and John Hancock
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morningstar and John is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Aggressive Growth and John Hancock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Mid and Morningstar Aggressive 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 Morningstar Aggressive Growth are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Mid has no effect on the direction of Morningstar Aggressive i.e., Morningstar Aggressive and John Hancock go up and down completely randomly.
Pair Corralation between Morningstar Aggressive and John Hancock
Assuming the 90 days horizon Morningstar Aggressive is expected to generate 1.84 times less return on investment than John Hancock. But when comparing it to its historical volatility, Morningstar Aggressive Growth is 1.6 times less risky than John Hancock. It trades about 0.1 of its potential returns per unit of risk. John Hancock Mid is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,456 in John Hancock Mid on September 12, 2024 and sell it today you would earn a total of 500.00 from holding John Hancock Mid or generate 34.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morningstar Aggressive Growth vs. John Hancock Mid
Performance |
| Timeline |
| Morningstar Aggressive |
| John Hancock Mid |
Morningstar Aggressive and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morningstar Aggressive and John Hancock
The main advantage of trading using opposite Morningstar Aggressive and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Aggressive position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.| Morningstar Aggressive vs. Vanguard Total Stock | Morningstar Aggressive vs. Vanguard 500 Index | Morningstar Aggressive vs. Vanguard Total Stock | Morningstar Aggressive vs. Vanguard Total Stock |
| John Hancock vs. Morningstar Aggressive Growth | John Hancock vs. Needham Aggressive Growth | John Hancock vs. Calvert High Yield | John Hancock vs. Western Asset High |
Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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