Correlation Between Washington Mutual and John Hancock
Can any of the company-specific risk be diversified away by investing in both Washington Mutual 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 Washington Mutual and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and John Hancock Investors, you can compare the effects of market volatilities on Washington Mutual 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 Washington Mutual with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and John Hancock.
Diversification Opportunities for Washington Mutual and John Hancock
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Washington and John is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and John Hancock Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Investors and Washington Mutual 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 Washington Mutual Investors 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 Investors has no effect on the direction of Washington Mutual i.e., Washington Mutual and John Hancock go up and down completely randomly.
Pair Corralation between Washington Mutual and John Hancock
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 1.76 times more return on investment than John Hancock. However, Washington Mutual is 1.76 times more volatile than John Hancock Investors. It trades about 0.29 of its potential returns per unit of risk. John Hancock Investors is currently generating about 0.17 per unit of risk. If you would invest 6,150 in Washington Mutual Investors on November 3, 2024 and sell it today you would earn a total of 251.00 from holding Washington Mutual Investors or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Washington Mutual Investors vs. John Hancock Investors
Performance |
| Timeline |
| Washington Mutual |
| John Hancock Investors |
Washington Mutual and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and John Hancock
The main advantage of trading using opposite Washington Mutual and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual 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.| Washington Mutual vs. Neuberger Berman Real | Washington Mutual vs. Dunham Real Estate | Washington Mutual vs. Real Estate Ultrasector | Washington Mutual vs. Texton Property |
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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 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.
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