Correlation Between Small Cap and John Hancock
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and John Hancock Income, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and John Hancock.
Diversification Opportunities for Small Cap and John Hancock
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMALL and John is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and Small Cap 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 Small Cap Value 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 Income has no effect on the direction of Small Cap i.e., Small Cap and John Hancock go up and down completely randomly.
Pair Corralation between Small Cap and John Hancock
Assuming the 90 days horizon Small Cap Value is expected to generate 4.38 times more return on investment than John Hancock. However, Small Cap is 4.38 times more volatile than John Hancock Income. It trades about 0.05 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.06 per unit of risk. If you would invest 945.00 in Small Cap Value on September 4, 2024 and sell it today you would earn a total of 274.00 from holding Small Cap Value or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. John Hancock Income
Performance |
| Timeline |
| Small Cap Value |
| John Hancock Income |
Small Cap and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and John Hancock
The main advantage of trading using opposite Small Cap and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Mid Cap Value | Small Cap vs. Equity Growth Fund | Small Cap vs. Income Growth Fund | Small Cap vs. Diversified Bond Fund |
| John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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