Correlation Between Franklin Mutual and John Hancock
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual 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 Franklin Mutual and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Global and John Hancock Global, you can compare the effects of market volatilities on Franklin Mutual 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 Franklin Mutual with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and John Hancock.
Diversification Opportunities for Franklin Mutual and John Hancock
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and John is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Global and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Franklin Mutual 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 Franklin Mutual Global 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 Global has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and John Hancock go up and down completely randomly.
Pair Corralation between Franklin Mutual and John Hancock
Assuming the 90 days horizon Franklin Mutual Global is expected to generate 1.17 times more return on investment than John Hancock. However, Franklin Mutual is 1.17 times more volatile than John Hancock Global. It trades about -0.03 of its potential returns per unit of risk. John Hancock Global is currently generating about -0.04 per unit of risk. If you would invest 3,332 in Franklin Mutual Global on August 31, 2024 and sell it today you would lose (26.00) from holding Franklin Mutual Global or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Global vs. John Hancock Global
Performance |
| Timeline |
| Franklin Mutual Global |
| John Hancock Global |
Franklin Mutual and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and John Hancock
The main advantage of trading using opposite Franklin Mutual and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual 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.| Franklin Mutual vs. Franklin Real Estate | Franklin Mutual vs. Guggenheim Risk Managed | Franklin Mutual vs. Jhancock Real Estate | Franklin Mutual vs. Msif Real Estate |
| John Hancock vs. Franklin Mutual Global | John Hancock vs. Dodge Cox Global | John Hancock vs. Dodge Global Stock | John Hancock vs. Franklin Mutual Global |
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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