Correlation Between John Hancock and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both John Hancock and Invesco Energy 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 Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Disciplined and Invesco Energy Fund, you can compare the effects of market volatilities on John Hancock and Invesco Energy 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 Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Invesco Energy.
Diversification Opportunities for John Hancock and Invesco Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Invesco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy 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 Disciplined are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of John Hancock i.e., John Hancock and Invesco Energy go up and down completely randomly.
Pair Corralation between John Hancock and Invesco Energy
Assuming the 90 days horizon John Hancock Disciplined is expected to generate 0.77 times more return on investment than Invesco Energy. However, John Hancock Disciplined is 1.3 times less risky than Invesco Energy. It trades about 0.11 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.04 per unit of risk. If you would invest 2,437 in John Hancock Disciplined on September 5, 2024 and sell it today you would earn a total of 299.00 from holding John Hancock Disciplined or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
John Hancock Disciplined vs. Invesco Energy Fund
Performance |
| Timeline |
| John Hancock Disciplined |
| Invesco Energy |
John Hancock and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Invesco Energy
The main advantage of trading using opposite John Hancock and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Invesco Energy 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 Invesco Energy will offset losses from the drop in Invesco Energy's long position.| John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
| Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Oppenheimer Rising Dividends |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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