Correlation Between John Hancock and New Economy
Can any of the company-specific risk be diversified away by investing in both John Hancock and New Economy 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 Economy 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 Economy Fund, you can compare the effects of market volatilities on John Hancock and New Economy 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 Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and New Economy.
Diversification Opportunities for John Hancock and New Economy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and New is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy 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 Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of John Hancock i.e., John Hancock and New Economy go up and down completely randomly.
Pair Corralation between John Hancock and New Economy
Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.08 times more return on investment than New Economy. However, John Hancock is 2.08 times more volatile than New Economy Fund. It trades about 0.05 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.09 per unit of risk. If you would invest 2,799 in John Hancock Financial on September 3, 2024 and sell it today you would earn a total of 1,141 from holding John Hancock Financial or generate 40.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. New Economy Fund
Performance |
| Timeline |
| John Hancock Financial |
| New Economy Fund |
John Hancock and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and New Economy
The main advantage of trading using opposite John Hancock and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, New Economy 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 Economy will offset losses from the drop in New Economy'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 |
| New Economy vs. Icon Financial Fund | New Economy vs. John Hancock Financial | New Economy vs. Angel Oak Financial | New Economy vs. Transamerica Financial Life |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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