Correlation Between John Hancock and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both John Hancock and Growth Allocation 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 Growth Allocation 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 Growth Allocation Fund, you can compare the effects of market volatilities on John Hancock and Growth Allocation 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 Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Growth Allocation.
Diversification Opportunities for John Hancock and Growth Allocation
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and Growth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation 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 Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of John Hancock i.e., John Hancock and Growth Allocation go up and down completely randomly.
Pair Corralation between John Hancock and Growth Allocation
Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.44 times more return on investment than Growth Allocation. However, John Hancock is 2.44 times more volatile than Growth Allocation Fund. It trades about 0.31 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.27 per unit of risk. If you would invest 3,503 in John Hancock Financial on November 8, 2024 and sell it today you would earn a total of 334.00 from holding John Hancock Financial or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Growth Allocation Fund
Performance |
| Timeline |
| John Hancock Financial |
| Growth Allocation |
John Hancock and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Growth Allocation
The main advantage of trading using opposite John Hancock and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation'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 |
| Growth Allocation vs. Fidelity Advisor Energy | Growth Allocation vs. Ivy Natural Resources | Growth Allocation vs. Clearbridge Energy Mlp | Growth Allocation vs. Short Oil Gas |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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