Correlation Between GM and John Hancock
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and John Hancock Var, you can compare the effects of market volatilities on GM 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 GM with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and John Hancock.
Diversification Opportunities for GM and John Hancock
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and John is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and John Hancock Var in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Var and GM 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 General Motors 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 Var has no effect on the direction of GM i.e., GM and John Hancock go up and down completely randomly.
Pair Corralation between GM and John Hancock
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.41 times more return on investment than John Hancock. However, GM is 2.41 times more volatile than John Hancock Var. It trades about -0.02 of its potential returns per unit of risk. John Hancock Var is currently generating about -0.11 per unit of risk. If you would invest 4,790 in General Motors on December 4, 2024 and sell it today you would lose (52.00) from holding General Motors or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. John Hancock Var
Performance |
| Timeline |
| General Motors |
| John Hancock Var |
GM and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and John Hancock
The main advantage of trading using opposite GM and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and John Hancock Var pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| John Hancock vs. Fidelity Advisor Diversified | John Hancock vs. Stone Ridge Diversified | John Hancock vs. Jhancock Diversified Macro | John Hancock vs. Madison Diversified Income |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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