Correlation Between John Hancock and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both John Hancock and Franklin Natural 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 Franklin Natural 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 Franklin Natural Resources, you can compare the effects of market volatilities on John Hancock and Franklin Natural 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 Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin Natural.
Diversification Opportunities for John Hancock and Franklin Natural
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Franklin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res 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 Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of John Hancock i.e., John Hancock and Franklin Natural go up and down completely randomly.
Pair Corralation between John Hancock and Franklin Natural
Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Franklin Natural. In addition to that, John Hancock is 1.09 times more volatile than Franklin Natural Resources. It trades about -0.06 of its total potential returns per unit of risk. Franklin Natural Resources is currently generating about -0.05 per unit of volatility. If you would invest 3,104 in Franklin Natural Resources on September 14, 2024 and sell it today you would lose (28.00) from holding Franklin Natural Resources or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Franklin Natural Resources
Performance |
| Timeline |
| John Hancock Financial |
| Franklin Natural Res |
John Hancock and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Franklin Natural
The main advantage of trading using opposite John Hancock and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin Natural 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 Franklin Natural will offset losses from the drop in Franklin Natural'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 |
| Franklin Natural vs. Small Pany Growth | Franklin Natural vs. Cardinal Small Cap | Franklin Natural vs. Franklin Small Cap | Franklin Natural vs. Vy Columbia Small |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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