Correlation Between Large Cap and John Hancock
Can any of the company-specific risk be diversified away by investing in both Large Cap 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 Large Cap and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Fund and John Hancock Disciplined, you can compare the effects of market volatilities on Large Cap 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 Large Cap with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and John Hancock.
Diversification Opportunities for Large Cap and John Hancock
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Large and John is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund 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 Large Cap 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 Large Cap Fund 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 Large Cap i.e., Large Cap and John Hancock go up and down completely randomly.
Pair Corralation between Large Cap and John Hancock
Assuming the 90 days horizon Large Cap is expected to generate 3.35 times less return on investment than John Hancock. In addition to that, Large Cap is 1.42 times more volatile than John Hancock Disciplined. It trades about 0.02 of its total potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.08 per unit of volatility. If you would invest 2,054 in John Hancock Disciplined on August 30, 2024 and sell it today you would earn a total of 811.00 from holding John Hancock Disciplined or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Fund vs. John Hancock Disciplined
Performance |
| Timeline |
| Large Cap Fund |
| John Hancock Disciplined |
Large Cap and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and John Hancock
The main advantage of trading using opposite Large Cap and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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.| Large Cap vs. Vanguard Total Stock | Large Cap vs. Vanguard 500 Index | Large Cap vs. Vanguard Total Stock | Large Cap vs. Vanguard Total Stock |
| John Hancock vs. Artisan Global Unconstrained | John Hancock vs. Morgan Stanley Global | John Hancock vs. Wisdomtree Siegel Global | John Hancock vs. Power Global Tactical |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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