Correlation Between John Hancock and Capital Income
Can any of the company-specific risk be diversified away by investing in both John Hancock and Capital Income 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 Capital Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Government and Capital Income Builder, you can compare the effects of market volatilities on John Hancock and Capital Income 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 Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Capital Income.
Diversification Opportunities for John Hancock and Capital Income
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between John and Capital is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Government are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of John Hancock i.e., John Hancock and Capital Income go up and down completely randomly.
Pair Corralation between John Hancock and Capital Income
Assuming the 90 days horizon John Hancock Government is expected to generate 0.89 times more return on investment than Capital Income. However, John Hancock Government is 1.12 times less risky than Capital Income. It trades about 0.08 of its potential returns per unit of risk. Capital Income Builder is currently generating about 0.02 per unit of risk. If you would invest 779.00 in John Hancock Government on August 31, 2024 and sell it today you would earn a total of 5.00 from holding John Hancock Government or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Government vs. Capital Income Builder
Performance |
| Timeline |
| John Hancock Government |
| Capital Income Builder |
John Hancock and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Capital Income
The main advantage of trading using opposite John Hancock and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| John Hancock vs. International Investors Gold | John Hancock vs. Franklin Gold Precious | John Hancock vs. Short Precious Metals | John Hancock vs. Precious Metals And |
| Capital Income vs. John Hancock Government | Capital Income vs. Dreyfus Government Cash | Capital Income vs. Virtus Seix Government | Capital Income vs. Us Government Securities |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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