Correlation Between John Hancock and Eventide Gilead
Can any of the company-specific risk be diversified away by investing in both John Hancock and Eventide Gilead 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 Eventide Gilead 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 Eventide Gilead, you can compare the effects of market volatilities on John Hancock and Eventide Gilead 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 Eventide Gilead. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Eventide Gilead.
Diversification Opportunities for John Hancock and Eventide Gilead
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Eventide is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Eventide Gilead in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead 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 Eventide Gilead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Gilead has no effect on the direction of John Hancock i.e., John Hancock and Eventide Gilead go up and down completely randomly.
Pair Corralation between John Hancock and Eventide Gilead
Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.75 times more return on investment than Eventide Gilead. However, John Hancock is 1.75 times more volatile than Eventide Gilead. It trades about 0.37 of its potential returns per unit of risk. Eventide Gilead is currently generating about 0.35 per unit of risk. If you would invest 3,378 in John Hancock Financial on September 4, 2024 and sell it today you would earn a total of 542.00 from holding John Hancock Financial or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Eventide Gilead
Performance |
| Timeline |
| John Hancock Financial |
| Eventide Gilead |
John Hancock and Eventide Gilead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Eventide Gilead
The main advantage of trading using opposite John Hancock and Eventide Gilead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Eventide Gilead 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 Eventide Gilead will offset losses from the drop in Eventide Gilead'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 |
| Eventide Gilead vs. Us Government Plus | Eventide Gilead vs. Blackrock Government Bond | Eventide Gilead vs. Us Government Securities | Eventide Gilead vs. Dunham Porategovernment Bond |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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