Correlation Between John Hancock and Transam Short-term
Can any of the company-specific risk be diversified away by investing in both John Hancock and Transam Short-term 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 Transam Short-term 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 Transam Short Term Bond, you can compare the effects of market volatilities on John Hancock and Transam Short-term 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 Transam Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Transam Short-term.
Diversification Opportunities for John Hancock and Transam Short-term
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between John and Transam is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Transam Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transam Short Term 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 Transam Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transam Short Term has no effect on the direction of John Hancock i.e., John Hancock and Transam Short-term go up and down completely randomly.
Pair Corralation between John Hancock and Transam Short-term
Considering the 90-day investment horizon John Hancock Financial is expected to generate 13.33 times more return on investment than Transam Short-term. However, John Hancock is 13.33 times more volatile than Transam Short Term Bond. It trades about 0.06 of its potential returns per unit of risk. Transam Short Term Bond is currently generating about 0.19 per unit of risk. If you would invest 3,352 in John Hancock Financial on November 27, 2024 and sell it today you would earn a total of 218.00 from holding John Hancock Financial or generate 6.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
John Hancock Financial vs. Transam Short Term Bond
Performance |
Timeline |
John Hancock Financial |
Transam Short Term |
John Hancock and Transam Short-term Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with John Hancock and Transam Short-term
The main advantage of trading using opposite John Hancock and Transam Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Transam Short-term 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 Transam Short-term will offset losses from the drop in Transam Short-term's long position.John Hancock vs. Tekla Life Sciences | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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