Correlation Between John Hancock and Sp 500
Can any of the company-specific risk be diversified away by investing in both John Hancock and Sp 500 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 Sp 500 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 Sp 500 Fund, you can compare the effects of market volatilities on John Hancock and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Sp 500.
Diversification Opportunities for John Hancock and Sp 500
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and RYSOX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Sp 500 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Fund has no effect on the direction of John Hancock i.e., John Hancock and Sp 500 go up and down completely randomly.
Pair Corralation between John Hancock and Sp 500
Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.15 times more return on investment than Sp 500. However, John Hancock is 2.15 times more volatile than Sp 500 Fund. It trades about 0.08 of its potential returns per unit of risk. Sp 500 Fund is currently generating about 0.12 per unit of risk. If you would invest 2,503 in John Hancock Financial on August 31, 2024 and sell it today you would earn a total of 1,437 from holding John Hancock Financial or generate 57.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
John Hancock Financial vs. Sp 500 Fund
Performance |
| Timeline |
| John Hancock Financial |
| Sp 500 Fund |
John Hancock and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Sp 500
The main advantage of trading using opposite John Hancock and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500'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 |
| Sp 500 vs. John Hancock Financial | Sp 500 vs. Icon Financial Fund | Sp 500 vs. Royce Global Financial | Sp 500 vs. Fidelity Advisor Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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