Correlation Between John Hancock and First Investors
Can any of the company-specific risk be diversified away by investing in both John Hancock and First Investors 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 First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Funds and First Investors Select, you can compare the effects of market volatilities on John Hancock and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and First Investors.
Diversification Opportunities for John Hancock and First Investors
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Funds and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 Funds are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of John Hancock i.e., John Hancock and First Investors go up and down completely randomly.
Pair Corralation between John Hancock and First Investors
Assuming the 90 days horizon John Hancock is expected to generate 2.69 times less return on investment than First Investors. But when comparing it to its historical volatility, John Hancock Funds is 2.0 times less risky than First Investors. It trades about 0.09 of its potential returns per unit of risk. First Investors Select is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 867.00 in First Investors Select on September 5, 2024 and sell it today you would earn a total of 527.00 from holding First Investors Select or generate 60.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
John Hancock Funds vs. First Investors Select
Performance |
| Timeline |
| John Hancock Funds |
| First Investors Select |
John Hancock and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and First Investors
The main advantage of trading using opposite John Hancock and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Balanced | John Hancock vs. Multimanager Lifestyle Aggressive |
| First Investors vs. Mondrian Emerging Markets | First Investors vs. Transamerica Emerging Markets | First Investors vs. Kinetics Market Opportunities | First Investors vs. Calamos Market Neutral |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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