Correlation Between Financials Ultrasector and John Hancock
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector 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 Financials Ultrasector and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and John Hancock Financial, you can compare the effects of market volatilities on Financials Ultrasector 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 Financials Ultrasector with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and John Hancock.
Diversification Opportunities for Financials Ultrasector and John Hancock
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financials and John is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund 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 Financials Ultrasector 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 Financials Ultrasector Profund 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 Financials Ultrasector i.e., Financials Ultrasector and John Hancock go up and down completely randomly.
Pair Corralation between Financials Ultrasector and John Hancock
Assuming the 90 days horizon Financials Ultrasector is expected to generate 1.25 times less return on investment than John Hancock. In addition to that, Financials Ultrasector is 1.15 times more volatile than John Hancock Financial. It trades about 0.22 of its total potential returns per unit of risk. John Hancock Financial is currently generating about 0.33 per unit of volatility. If you would invest 3,409 in John Hancock Financial on August 27, 2024 and sell it today you would earn a total of 486.00 from holding John Hancock Financial or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. John Hancock Financial
Performance |
| Timeline |
| Financials Ultrasector |
| John Hancock Financial |
Financials Ultrasector and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and John Hancock
The main advantage of trading using opposite Financials Ultrasector and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector 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.| Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Ultrashort Mid Cap Profund | Financials Ultrasector vs. Ultrashort Mid Cap Profund |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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