Correlation Between John Hancock and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both John Hancock and Federated Institutional 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 Federated Institutional 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 Federated Institutional High, you can compare the effects of market volatilities on John Hancock and Federated Institutional 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 Federated Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Federated Institutional.
Diversification Opportunities for John Hancock and Federated Institutional
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Federated is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional 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 Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of John Hancock i.e., John Hancock and Federated Institutional go up and down completely randomly.
Pair Corralation between John Hancock and Federated Institutional
Considering the 90-day investment horizon John Hancock Financial is expected to generate 6.71 times more return on investment than Federated Institutional. However, John Hancock is 6.71 times more volatile than Federated Institutional High. It trades about 0.18 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.0 per unit of risk. If you would invest 3,785 in John Hancock Financial on September 12, 2024 and sell it today you would earn a total of 107.00 from holding John Hancock Financial or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Federated Institutional High
Performance |
| Timeline |
| John Hancock Financial |
| Federated Institutional |
John Hancock and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Federated Institutional
The main advantage of trading using opposite John Hancock and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Federated Institutional 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 Federated Institutional will offset losses from the drop in Federated Institutional'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 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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