Correlation Between John Hancock and Cullen Small
Can any of the company-specific risk be diversified away by investing in both John Hancock and Cullen Small 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 John Hancock and Cullen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Financial and Cullen Small Cap, you can compare the effects of market volatilities on John Hancock and Cullen Small 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 John Hancock with a short position of Cullen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Cullen Small.
Diversification Opportunities for John Hancock and Cullen Small
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Cullen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Cullen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Small Cap and John Hancock 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 John Hancock Financial are associated (or correlated) with Cullen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Small Cap has no effect on the direction of John Hancock i.e., John Hancock and Cullen Small go up and down completely randomly.
Pair Corralation between John Hancock and Cullen Small
Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.18 times more return on investment than Cullen Small. However, John Hancock is 1.18 times more volatile than Cullen Small Cap. It trades about 0.08 of its potential returns per unit of risk. Cullen Small Cap is currently generating about 0.05 per unit of risk. If you would invest 2,487 in John Hancock Financial on September 2, 2024 and sell it today you would earn a total of 1,453 from holding John Hancock Financial or generate 58.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Cullen Small Cap
Performance |
| Timeline |
| John Hancock Financial |
| Cullen Small Cap |
John Hancock and Cullen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Cullen Small
The main advantage of trading using opposite John Hancock and Cullen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Cullen Small 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 Cullen Small will offset losses from the drop in Cullen Small's long position.| John Hancock vs. Tekla Life Sciences | John Hancock vs. Tekla World Healthcare | John Hancock vs. Tekla Healthcare Opportunities | John Hancock vs. Royce Value Closed |
| Cullen Small vs. Lifestyle Ii Moderate | Cullen Small vs. Dimensional Retirement Income | Cullen Small vs. Franklin Lifesmart Retirement | Cullen Small vs. Calvert Moderate Allocation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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