Correlation Between John Hancock and American Funds
Can any of the company-specific risk be diversified away by investing in both John Hancock and American Funds 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 Funds 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 American Funds Income, you can compare the effects of market volatilities on John Hancock and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and American Funds.
Diversification Opportunities for John Hancock and American Funds
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of John Hancock i.e., John Hancock and American Funds go up and down completely randomly.
Pair Corralation between John Hancock and American Funds
Assuming the 90 days horizon John Hancock Variable is expected to generate 2.5 times more return on investment than American Funds. However, John Hancock is 2.5 times more volatile than American Funds Income. It trades about 0.18 of its potential returns per unit of risk. American Funds Income is currently generating about 0.18 per unit of risk. If you would invest 1,843 in John Hancock Variable on September 1, 2024 and sell it today you would earn a total of 383.00 from holding John Hancock Variable or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Variable vs. American Funds Income
Performance |
| Timeline |
| John Hancock Variable |
| American Funds Income |
John Hancock and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and American Funds
The main advantage of trading using opposite John Hancock and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| John Hancock vs. Pace Municipal Fixed | John Hancock vs. T Rowe Price | John Hancock vs. Old Westbury Municipal | John Hancock vs. T Rowe Price |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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