Correlation Between John Hancock and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both John Hancock and Franklin Lifesmart 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 Lifesmart 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 Lifesmart Retirement, you can compare the effects of market volatilities on John Hancock and Franklin Lifesmart 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 Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin Lifesmart.
Diversification Opportunities for John Hancock and Franklin Lifesmart
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Franklin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 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 Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart has no effect on the direction of John Hancock i.e., John Hancock and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between John Hancock and Franklin Lifesmart
Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Franklin Lifesmart. In addition to that, John Hancock is 3.3 times more volatile than Franklin Lifesmart Retirement. It trades about -0.28 of its total potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about -0.3 per unit of volatility. If you would invest 1,064 in Franklin Lifesmart Retirement on October 11, 2024 and sell it today you would lose (31.00) from holding Franklin Lifesmart Retirement or give up 2.91% 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 Lifesmart Retirement
Performance |
| Timeline |
| John Hancock Financial |
| Franklin Lifesmart |
John Hancock and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Franklin Lifesmart
The main advantage of trading using opposite John Hancock and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart'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 Lifesmart vs. Davis Financial Fund | Franklin Lifesmart vs. Mesirow Financial Small | Franklin Lifesmart vs. Gabelli Global Financial | Franklin Lifesmart vs. John Hancock Financial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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