Correlation Between John Hancock and Davis Financial
Can any of the company-specific risk be diversified away by investing in both John Hancock and Davis Financial 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 Davis Financial 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 Davis Financial Fund, you can compare the effects of market volatilities on John Hancock and Davis Financial 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 Davis Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Davis Financial.
Diversification Opportunities for John Hancock and Davis Financial
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and DAVIS is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Davis Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Financial 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 Davis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Financial has no effect on the direction of John Hancock i.e., John Hancock and Davis Financial go up and down completely randomly.
Pair Corralation between John Hancock and Davis Financial
Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.49 times more return on investment than Davis Financial. However, John Hancock is 1.49 times more volatile than Davis Financial Fund. It trades about 0.11 of its potential returns per unit of risk. Davis Financial Fund is currently generating about 0.14 per unit of risk. If you would invest 2,724 in John Hancock Financial on September 2, 2024 and sell it today you would earn a total of 1,216 from holding John Hancock Financial or generate 44.64% 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. Davis Financial Fund
Performance |
| Timeline |
| John Hancock Financial |
| Davis Financial |
John Hancock and Davis Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Davis Financial
The main advantage of trading using opposite John Hancock and Davis Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Davis Financial 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 Davis Financial will offset losses from the drop in Davis Financial'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 |
| Davis Financial vs. Baillie Gifford Health | Davis Financial vs. Allianzgi Health Sciences | Davis Financial vs. Lord Abbett Health | Davis Financial vs. Invesco Global Health |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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