Correlation Between John Hancock and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both John Hancock and Wells Fargo 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 Wells Fargo 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 Wells Fargo Large, you can compare the effects of market volatilities on John Hancock and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Wells Fargo.
Diversification Opportunities for John Hancock and Wells Fargo
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Wells is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and Wells Fargo Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Large 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Large has no effect on the direction of John Hancock i.e., John Hancock and Wells Fargo go up and down completely randomly.
Pair Corralation between John Hancock and Wells Fargo
Assuming the 90 days horizon John Hancock is expected to generate 2.63 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, John Hancock Variable is 1.14 times less risky than Wells Fargo. It trades about 0.05 of its potential returns per unit of risk. Wells Fargo Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,404 in Wells Fargo Large on November 3, 2024 and sell it today you would earn a total of 123.00 from holding Wells Fargo Large or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Variable vs. Wells Fargo Large
Performance |
| Timeline |
| John Hancock Variable |
| Wells Fargo Large |
John Hancock and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Wells Fargo
The main advantage of trading using opposite John Hancock and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| John Hancock vs. Versatile Bond Portfolio | John Hancock vs. Us Vector Equity | John Hancock vs. Eip Growth And | John Hancock vs. Qs Large Cap |
| Wells Fargo vs. Jpmorgan Mid Cap | Wells Fargo vs. Jpmorgan International Value | Wells Fargo vs. Jpmorgan Small Cap | Wells Fargo vs. Wells Fargo Discovery |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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