Correlation Between Boeing and John Hancock
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and John Hancock Financial, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and John Hancock.
Diversification Opportunities for Boeing and John Hancock
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and John is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Boeing 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 The Boeing 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 Financial has no effect on the direction of Boeing i.e., Boeing and John Hancock go up and down completely randomly.
Pair Corralation between Boeing and John Hancock
Allowing for the 90-day total investment horizon Boeing is expected to generate 7.08 times less return on investment than John Hancock. In addition to that, Boeing is 1.15 times more volatile than John Hancock Financial. It trades about 0.04 of its total potential returns per unit of risk. John Hancock Financial is currently generating about 0.36 per unit of volatility. If you would invest 3,409 in John Hancock Financial on August 28, 2024 and sell it today you would earn a total of 536.00 from holding John Hancock Financial or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. John Hancock Financial
Performance |
| Timeline |
| Boeing |
| John Hancock Financial |
Boeing and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and John Hancock
The main advantage of trading using opposite Boeing and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.The idea behind The Boeing and John Hancock Financial 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.| John Hancock vs. Tekla Life Sciences | John Hancock vs. Tekla World Healthcare | John Hancock vs. Tekla Healthcare Opportunities | John Hancock vs. Royce Value Closed |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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