Correlation Between MicroSectors FANG and John Hancock
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG 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 MicroSectors FANG and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and John Hancock Hedged, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and John Hancock.
Diversification Opportunities for MicroSectors FANG and John Hancock
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and John is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and John Hancock Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Hedged and MicroSectors FANG 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 MicroSectors FANG Index 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 Hedged has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and John Hancock go up and down completely randomly.
Pair Corralation between MicroSectors FANG and John Hancock
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the John Hancock. In addition to that, MicroSectors FANG is 9.86 times more volatile than John Hancock Hedged. It trades about -0.01 of its total potential returns per unit of risk. John Hancock Hedged is currently generating about 0.15 per unit of volatility. If you would invest 1,032 in John Hancock Hedged on November 7, 2024 and sell it today you would earn a total of 18.00 from holding John Hancock Hedged or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
MicroSectors FANG Index vs. John Hancock Hedged
Performance |
| Timeline |
| MicroSectors FANG Index |
| John Hancock Hedged |
MicroSectors FANG and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and John Hancock
The main advantage of trading using opposite MicroSectors FANG and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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.| MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
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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 Stocks Directory module to find actively traded stocks across global markets.
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