Correlation Between American Funds and John Hancock
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Government and John Hancock Government, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and John Hancock.
Diversification Opportunities for American Funds and John Hancock
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and John is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and John Hancock Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Government and American Funds 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 American Funds Government 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 Government has no effect on the direction of American Funds i.e., American Funds and John Hancock go up and down completely randomly.
Pair Corralation between American Funds and John Hancock
Assuming the 90 days horizon American Funds Government is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Government is 1.23 times less risky than John Hancock. The mutual fund trades about -0.14 of its potential returns per unit of risk. The John Hancock Government is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 781.00 in John Hancock Government on August 24, 2024 and sell it today you would lose (5.00) from holding John Hancock Government or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Government vs. John Hancock Government
Performance |
| Timeline |
| American Funds Government |
| John Hancock Government |
American Funds and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and John Hancock
The main advantage of trading using opposite American Funds and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Ultra Short Term Fixed | American Funds vs. The Hartford Equity | American Funds vs. Vanguard Telecommunication Services | American Funds vs. Federated Equity Income |
| John Hancock vs. Vanguard Gnma Fund | John Hancock vs. Vanguard Intermediate Term Government | John Hancock vs. Us Government Securities | John Hancock vs. Us Government Securities |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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