Correlation Between Ford and John Hancock
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and John Hancock Disciplined, you can compare the effects of market volatilities on Ford 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 Ford with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and John Hancock.
Diversification Opportunities for Ford and John Hancock
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and John is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Ford 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 Ford Motor 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 Disciplined has no effect on the direction of Ford i.e., Ford and John Hancock go up and down completely randomly.
Pair Corralation between Ford and John Hancock
Taking into account the 90-day investment horizon Ford is expected to generate 3.04 times less return on investment than John Hancock. In addition to that, Ford is 2.93 times more volatile than John Hancock Disciplined. It trades about 0.01 of its total potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.09 per unit of volatility. If you would invest 2,017 in John Hancock Disciplined on September 3, 2024 and sell it today you would earn a total of 718.00 from holding John Hancock Disciplined or generate 35.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. John Hancock Disciplined
Performance |
| Timeline |
| Ford Motor |
| John Hancock Disciplined |
Ford and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and John Hancock
The main advantage of trading using opposite Ford and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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