Correlation Between Free Market and John Hancock
Can any of the company-specific risk be diversified away by investing in both Free Market 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 Free Market and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Free Market International and John Hancock Financial, you can compare the effects of market volatilities on Free Market 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 Free Market with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Free Market and John Hancock.
Diversification Opportunities for Free Market and John Hancock
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Free and John is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Free Market International and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Free Market 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 Free Market International 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 Financial has no effect on the direction of Free Market i.e., Free Market and John Hancock go up and down completely randomly.
Pair Corralation between Free Market and John Hancock
Assuming the 90 days horizon Free Market is expected to generate 2.89 times less return on investment than John Hancock. But when comparing it to its historical volatility, Free Market International is 1.93 times less risky than John Hancock. It trades about 0.07 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,746 in John Hancock Financial on September 4, 2024 and sell it today you would earn a total of 1,175 from holding John Hancock Financial or generate 42.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Free Market International vs. John Hancock Financial
Performance |
| Timeline |
| Free Market International |
| John Hancock Financial |
Free Market and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Free Market and John Hancock
The main advantage of trading using opposite Free Market and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Free Market 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.| Free Market vs. John Hancock Financial | Free Market vs. Mesirow Financial Small | Free Market vs. Financials Ultrasector Profund | Free Market vs. Blackrock Financial Institutions |
| John Hancock vs. Tekla Life Sciences | John Hancock vs. Tekla World Healthcare | John Hancock vs. Tekla Healthcare Opportunities | John Hancock vs. Royce Value Closed |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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