Correlation Between John Hancock and Regional Bank

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Can any of the company-specific risk be diversified away by investing in both John Hancock and Regional Bank 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 Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Esg and Regional Bank Fund, you can compare the effects of market volatilities on John Hancock and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Regional Bank.

Diversification Opportunities for John Hancock and Regional Bank

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between John and Regional is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Esg and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Esg are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of John Hancock i.e., John Hancock and Regional Bank go up and down completely randomly.

Pair Corralation between John Hancock and Regional Bank

Assuming the 90 days horizon John Hancock is expected to generate 8.77 times less return on investment than Regional Bank. But when comparing it to its historical volatility, John Hancock Esg is 7.43 times less risky than Regional Bank. It trades about 0.06 of its potential returns per unit of risk. Regional Bank Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,535  in Regional Bank Fund on September 14, 2024 and sell it today you would earn a total of  790.00  from holding Regional Bank Fund or generate 31.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

John Hancock Esg  vs.  Regional Bank Fund

 Performance 
       Timeline  
John Hancock Esg 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days John Hancock Esg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Regional Bank 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Regional Bank Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Regional Bank showed solid returns over the last few months and may actually be approaching a breakup point.

John Hancock and Regional Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with John Hancock and Regional Bank

The main advantage of trading using opposite John Hancock and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.
The idea behind John Hancock Esg and Regional Bank Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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