Correlation Between John Hancock and Western Asset
Can any of the company-specific risk be diversified away by investing in both John Hancock and Western Asset 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 John Hancock and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Preferred and Western Asset Global, you can compare the effects of market volatilities on John Hancock and Western Asset 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 John Hancock with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Western Asset.
Diversification Opportunities for John Hancock and Western Asset
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between John and Western is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and John Hancock 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 John Hancock Preferred are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Global has no effect on the direction of John Hancock i.e., John Hancock and Western Asset go up and down completely randomly.
Pair Corralation between John Hancock and Western Asset
Considering the 90-day investment horizon John Hancock Preferred is expected to under-perform the Western Asset. In addition to that, John Hancock is 1.25 times more volatile than Western Asset Global. It trades about -0.12 of its total potential returns per unit of risk. Western Asset Global is currently generating about -0.11 per unit of volatility. If you would invest 1,172 in Western Asset Global on August 30, 2024 and sell it today you would lose (16.00) from holding Western Asset Global or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Preferred vs. Western Asset Global
Performance |
| Timeline |
| John Hancock Preferred |
| Western Asset Global |
John Hancock and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Western Asset
The main advantage of trading using opposite John Hancock and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Premium | John Hancock vs. John Hancock Tax |
| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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