Correlation Between Goldman Sachs and John Hancock
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Tax Advantaged and John Hancock Financial, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and John Hancock.
Diversification Opportunities for Goldman Sachs and John Hancock
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and John is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Tax Advantaged 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 Goldman Sachs 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 Goldman Sachs Tax Advantaged 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 Goldman Sachs i.e., Goldman Sachs and John Hancock go up and down completely randomly.
Pair Corralation between Goldman Sachs and John Hancock
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.5 times less return on investment than John Hancock. But when comparing it to its historical volatility, Goldman Sachs Tax Advantaged is 2.05 times less risky than John Hancock. It trades about 0.12 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,829 in John Hancock Financial on September 14, 2024 and sell it today you would earn a total of 933.00 from holding John Hancock Financial or generate 32.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Goldman Sachs Tax Advantaged vs. John Hancock Financial
Performance |
| Timeline |
| Goldman Sachs Tax |
| John Hancock Financial |
Goldman Sachs and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and John Hancock
The main advantage of trading using opposite Goldman Sachs and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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