Correlation Between John Hancock and New World
Can any of the company-specific risk be diversified away by investing in both John Hancock and New World 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 New World 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 New World Fund, you can compare the effects of market volatilities on John Hancock and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and New World.
Diversification Opportunities for John Hancock and New World
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between John and New is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of John Hancock i.e., John Hancock and New World go up and down completely randomly.
Pair Corralation between John Hancock and New World
Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.3 times more return on investment than New World. However, John Hancock is 2.3 times more volatile than New World Fund. It trades about 0.1 of its potential returns per unit of risk. New World Fund is currently generating about -0.09 per unit of risk. If you would invest 3,352 in John Hancock Financial on October 26, 2024 and sell it today you would earn a total of 336.00 from holding John Hancock Financial or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. New World Fund
Performance |
| Timeline |
| John Hancock Financial |
| New World Fund |
John Hancock and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and New World
The main advantage of trading using opposite John Hancock and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, New World 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 New World will offset losses from the drop in New World'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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