Correlation Between John Hancock and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both John Hancock and Dodge Cox 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 Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Variable and Dodge Cox Stock, you can compare the effects of market volatilities on John Hancock and Dodge Cox 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 Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Dodge Cox.
Diversification Opportunities for John Hancock and Dodge Cox
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Dodge is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock 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 Variable are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Stock has no effect on the direction of John Hancock i.e., John Hancock and Dodge Cox go up and down completely randomly.
Pair Corralation between John Hancock and Dodge Cox
Assuming the 90 days horizon John Hancock Variable is expected to generate 1.4 times more return on investment than Dodge Cox. However, John Hancock is 1.4 times more volatile than Dodge Cox Stock. It trades about 0.06 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about -0.02 per unit of risk. If you would invest 2,068 in John Hancock Variable on November 28, 2024 and sell it today you would earn a total of 18.00 from holding John Hancock Variable or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Variable vs. Dodge Cox Stock
Performance |
| Timeline |
| John Hancock Variable |
| Dodge Cox Stock |
John Hancock and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Dodge Cox
The main advantage of trading using opposite John Hancock and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Dodge Cox 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 Dodge Cox will offset losses from the drop in Dodge Cox's long position.| John Hancock vs. Ftufox | John Hancock vs. Rational Dividend Capture | John Hancock vs. Fabwx | John Hancock vs. Fsultx |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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