Correlation Between John Hancock and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both John Hancock and Vanguard Total 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 Vanguard Total 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 Vanguard Total Stock, you can compare the effects of market volatilities on John Hancock and Vanguard Total 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 Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Vanguard Total.
Diversification Opportunities for John Hancock and Vanguard Total
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of John Hancock i.e., John Hancock and Vanguard Total go up and down completely randomly.
Pair Corralation between John Hancock and Vanguard Total
Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.92 times more return on investment than Vanguard Total. However, John Hancock is 1.92 times more volatile than Vanguard Total Stock. It trades about 0.1 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.15 per unit of risk. If you would invest 2,746 in John Hancock Financial on September 4, 2024 and sell it today you would earn a total of 1,175 from holding John Hancock Financial or generate 42.79% 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. Vanguard Total Stock
Performance |
| Timeline |
| John Hancock Financial |
| Vanguard Total Stock |
John Hancock and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Vanguard Total
The main advantage of trading using opposite John Hancock and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total'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 |
| Vanguard Total vs. John Hancock Financial | Vanguard Total vs. Vanguard Financials Index | Vanguard Total vs. Goldman Sachs Financial | Vanguard Total vs. Royce Global 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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