Correlation Between John Hancock and Free Market
Can any of the company-specific risk be diversified away by investing in both John Hancock and Free Market 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 Free Market 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 Free Market International, you can compare the effects of market volatilities on John Hancock and Free Market 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 Free Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Free Market.
Diversification Opportunities for John Hancock and Free Market
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between John and Free is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Free Market International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market International 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market International has no effect on the direction of John Hancock i.e., John Hancock and Free Market go up and down completely randomly.
Pair Corralation between John Hancock and Free Market
Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.88 times more return on investment than Free Market. However, John Hancock is 1.88 times more volatile than Free Market International. It trades about 0.1 of its potential returns per unit of risk. Free Market International is currently generating about 0.06 per unit of risk. If you would invest 2,807 in John Hancock Financial on September 12, 2024 and sell it today you would earn a total of 1,085 from holding John Hancock Financial or generate 38.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Free Market International
Performance |
| Timeline |
| John Hancock Financial |
| Free Market International |
John Hancock and Free Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Free Market
The main advantage of trading using opposite John Hancock and Free Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Free Market 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 Free Market will offset losses from the drop in Free Market'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 |
| Free Market vs. Oakmark International Fund | Free Market vs. Oakmark Global Fund | Free Market vs. Oakmark Select Fund | Free Market vs. Oakmark Global Select |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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