Correlation Between John Hancock and Wilmington Municipal
Can any of the company-specific risk be diversified away by investing in both John Hancock and Wilmington Municipal 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 Wilmington Municipal 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 Wilmington Municipal Bond, you can compare the effects of market volatilities on John Hancock and Wilmington Municipal 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 Wilmington Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Wilmington Municipal.
Diversification Opportunities for John Hancock and Wilmington Municipal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between John and Wilmington is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Wilmington Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Municipal Bond 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 Wilmington Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Municipal Bond has no effect on the direction of John Hancock i.e., John Hancock and Wilmington Municipal go up and down completely randomly.
Pair Corralation between John Hancock and Wilmington Municipal
Considering the 90-day investment horizon John Hancock Financial is expected to generate 8.96 times more return on investment than Wilmington Municipal. However, John Hancock is 8.96 times more volatile than Wilmington Municipal Bond. It trades about 0.11 of its potential returns per unit of risk. Wilmington Municipal Bond is currently generating about 0.07 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Financial vs. Wilmington Municipal Bond
Performance |
| Timeline |
| John Hancock Financial |
| Wilmington Municipal Bond |
John Hancock and Wilmington Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Wilmington Municipal
The main advantage of trading using opposite John Hancock and Wilmington Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Wilmington Municipal 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 Wilmington Municipal will offset losses from the drop in Wilmington Municipal'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 |
| Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Broad Market | Wilmington Municipal vs. Wilmington Municipal Bond |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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