Correlation Between American Funds and John Hancock
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and John Hancock Disciplined, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and John Hancock.
Diversification Opportunities for American Funds and John Hancock
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and John is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American 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 American Funds 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 American Funds American 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 American Funds i.e., American Funds and John Hancock go up and down completely randomly.
Pair Corralation between American Funds and John Hancock
Assuming the 90 days horizon American Funds American is expected to generate 0.79 times more return on investment than John Hancock. However, American Funds American is 1.27 times less risky than John Hancock. It trades about -0.1 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about -0.22 per unit of risk. If you would invest 6,015 in American Funds American on September 12, 2024 and sell it today you would lose (56.00) from holding American Funds American or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds American vs. John Hancock Disciplined
Performance |
| Timeline |
| American Funds American |
| John Hancock Disciplined |
American Funds and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and John Hancock
The main advantage of trading using opposite American Funds and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Century Small Cap | American Funds vs. Ab Value Fund | American Funds vs. Volumetric Fund Volumetric | American Funds vs. T Rowe Price |
| John Hancock vs. Vanguard Value Index | John Hancock vs. Dodge Cox Stock | John Hancock vs. American Mutual Fund | John Hancock vs. American Funds American |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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