Correlation Between John Hancock and American Beacon
Can any of the company-specific risk be diversified away by investing in both John Hancock and American Beacon 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 American Beacon 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 American Beacon Ssi, you can compare the effects of market volatilities on John Hancock and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and American Beacon.
Diversification Opportunities for John Hancock and American Beacon
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and American is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Funds and American Beacon Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ssi 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ssi has no effect on the direction of John Hancock i.e., John Hancock and American Beacon go up and down completely randomly.
Pair Corralation between John Hancock and American Beacon
Assuming the 90 days horizon John Hancock Funds is expected to generate 5.01 times more return on investment than American Beacon. However, John Hancock is 5.01 times more volatile than American Beacon Ssi. It trades about 0.14 of its potential returns per unit of risk. American Beacon Ssi is currently generating about 0.61 per unit of risk. If you would invest 1,057 in John Hancock Funds on September 3, 2024 and sell it today you would earn a total of 66.00 from holding John Hancock Funds or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Funds vs. American Beacon Ssi
Performance |
| Timeline |
| John Hancock Funds |
| American Beacon Ssi |
John Hancock and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and American Beacon
The main advantage of trading using opposite John Hancock and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| John Hancock vs. Vanguard Lifestrategy Moderate | John Hancock vs. Vanguard Lifestrategy Income | John Hancock vs. Vanguard Lifestrategy Growth | John Hancock vs. Vanguard Explorer Fund |
| American Beacon vs. Virtus Dfa 2040 | American Beacon vs. Franklin Lifesmart 2050 | American Beacon vs. Jp Morgan Smartretirement | American Beacon vs. John Hancock Funds |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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