Correlation Between Regional Bank and John Hancock
Can any of the company-specific risk be diversified away by investing in both Regional Bank 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 Regional Bank and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and John Hancock Strategic, you can compare the effects of market volatilities on Regional Bank 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 Regional Bank with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and John Hancock.
Diversification Opportunities for Regional Bank and John Hancock
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regional and John is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and John Hancock Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Strategic and Regional Bank 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 Regional Bank 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 Strategic has no effect on the direction of Regional Bank i.e., Regional Bank and John Hancock go up and down completely randomly.
Pair Corralation between Regional Bank and John Hancock
Assuming the 90 days horizon Regional Bank Fund is expected to under-perform the John Hancock. In addition to that, Regional Bank is 1.07 times more volatile than John Hancock Strategic. It trades about -0.08 of its total potential returns per unit of risk. John Hancock Strategic is currently generating about 0.09 per unit of volatility. If you would invest 2,917 in John Hancock Strategic on September 12, 2024 and sell it today you would earn a total of 38.00 from holding John Hancock Strategic or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. John Hancock Strategic
Performance |
| Timeline |
| Regional Bank |
| John Hancock Strategic |
Regional Bank and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and John Hancock
The main advantage of trading using opposite Regional Bank and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank 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.| Regional Bank vs. Blackrock Inflation Protected | Regional Bank vs. Aqr Managed Futures | Regional Bank vs. Short Duration Inflation | Regional Bank vs. Ab Bond Inflation |
| John Hancock vs. Balanced Fund Investor | John Hancock vs. T Rowe Price | John Hancock vs. Small Cap Stock | John Hancock vs. T Rowe Price |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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