Correlation Between John Hancock and Old Westbury
Can any of the company-specific risk be diversified away by investing in both John Hancock and Old Westbury 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 Old Westbury 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 Old Westbury Municipal, you can compare the effects of market volatilities on John Hancock and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Old Westbury.
Diversification Opportunities for John Hancock and Old Westbury
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between John and Old is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of John Hancock i.e., John Hancock and Old Westbury go up and down completely randomly.
Pair Corralation between John Hancock and Old Westbury
Considering the 90-day investment horizon John Hancock Financial is expected to generate 11.21 times more return on investment than Old Westbury. However, John Hancock is 11.21 times more volatile than Old Westbury Municipal. It trades about 0.02 of its potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.02 per unit of risk. If you would invest 2,954 in John Hancock Financial on October 14, 2024 and sell it today you would earn a total of 426.00 from holding John Hancock Financial or generate 14.42% 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. Old Westbury Municipal
Performance |
| Timeline |
| John Hancock Financial |
| Old Westbury Municipal |
John Hancock and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Old Westbury
The main advantage of trading using opposite John Hancock and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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