Correlation Between John Hancock and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both John Hancock and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley Institutional, you can compare the effects of market volatilities on John Hancock and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Morgan Stanley.
Diversification Opportunities for John Hancock and Morgan Stanley
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between John and Morgan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Insti has no effect on the direction of John Hancock i.e., John Hancock and Morgan Stanley go up and down completely randomly.
Pair Corralation between John Hancock and Morgan Stanley
Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.25 times more return on investment than Morgan Stanley. However, John Hancock is 2.25 times more volatile than Morgan Stanley Institutional. It trades about 0.13 of its potential returns per unit of risk. Morgan Stanley Institutional is currently generating about 0.27 per unit of risk. If you would invest 3,557 in John Hancock Financial on October 28, 2024 and sell it today you would earn a total of 137.00 from holding John Hancock Financial or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Morgan Stanley Institutional
Performance |
| Timeline |
| John Hancock Financial |
| Morgan Stanley Insti |
John Hancock and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Morgan Stanley
The main advantage of trading using opposite John Hancock and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley'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 |
| Morgan Stanley vs. Emerging Markets Equity | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income | Morgan Stanley vs. Global Fixed Income |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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