Correlation Between European Equity and John Hancock
Can any of the company-specific risk be diversified away by investing in both European Equity and John Hancock 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 European Equity and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and John Hancock Income, you can compare the effects of market volatilities on European Equity and John Hancock 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 European Equity with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and John Hancock.
Diversification Opportunities for European Equity and John Hancock
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between European and John is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and European Equity 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 European Equity Closed are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Income has no effect on the direction of European Equity i.e., European Equity and John Hancock go up and down completely randomly.
Pair Corralation between European Equity and John Hancock
Considering the 90-day investment horizon European Equity Closed is expected to generate 1.4 times more return on investment than John Hancock. However, European Equity is 1.4 times more volatile than John Hancock Income. It trades about 0.12 of its potential returns per unit of risk. John Hancock Income is currently generating about -0.03 per unit of risk. If you would invest 827.00 in European Equity Closed on October 22, 2024 and sell it today you would earn a total of 12.00 from holding European Equity Closed or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
European Equity Closed vs. John Hancock Income
Performance |
| Timeline |
| European Equity Closed |
| John Hancock Income |
European Equity and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and John Hancock
The main advantage of trading using opposite European Equity and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
| John Hancock vs. MFS High Income | John Hancock vs. MFS Investment Grade | John Hancock vs. Blackrock Muniholdings Closed | John Hancock vs. Eaton Vance National |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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