Correlation Between Small Cap and John Hancock
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and John Hancock Disciplined, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and John Hancock.
Diversification Opportunities for Small Cap and John Hancock
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and John is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Small Cap 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 Small Cap Equity 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 Disciplined has no effect on the direction of Small Cap i.e., Small Cap and John Hancock go up and down completely randomly.
Pair Corralation between Small Cap and John Hancock
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.51 times more return on investment than John Hancock. However, Small Cap is 1.51 times more volatile than John Hancock Disciplined. It trades about 0.14 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.14 per unit of risk. If you would invest 3,534 in Small Cap Equity on September 12, 2024 and sell it today you would earn a total of 363.00 from holding Small Cap Equity or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. John Hancock Disciplined
Performance |
| Timeline |
| Small Cap Equity |
| John Hancock Disciplined |
Small Cap and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and John Hancock
The main advantage of trading using opposite Small Cap and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. John Hancock Disciplined | Small Cap vs. Oppenheimer International Growth | Small Cap vs. Hartford Schroders Emerging | Small Cap vs. Edgewood Growth Fund |
| John Hancock vs. Ab Small Cap | John Hancock vs. Df Dent Small | John Hancock vs. Sp Smallcap 600 | John Hancock vs. Siit Small Mid |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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