Correlation Between John Hancock and Franklin California
Can any of the company-specific risk be diversified away by investing in both John Hancock and Franklin California 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 Franklin California 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 Franklin California High, you can compare the effects of market volatilities on John Hancock and Franklin California 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 Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin California.
Diversification Opportunities for John Hancock and Franklin California
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Franklin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High 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 Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of John Hancock i.e., John Hancock and Franklin California go up and down completely randomly.
Pair Corralation between John Hancock and Franklin California
Assuming the 90 days horizon John Hancock Government is expected to under-perform the Franklin California. In addition to that, John Hancock is 1.21 times more volatile than Franklin California High. It trades about -0.17 of its total potential returns per unit of risk. Franklin California High is currently generating about -0.05 per unit of volatility. If you would invest 1,004 in Franklin California High on August 29, 2024 and sell it today you would lose (6.00) from holding Franklin California High or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Government vs. Franklin California High
Performance |
| Timeline |
| John Hancock Government |
| Franklin California High |
John Hancock and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Franklin California
The main advantage of trading using opposite John Hancock and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin California 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 Franklin California will offset losses from the drop in Franklin California's long position.| John Hancock vs. Us Global Investors | John Hancock vs. T Rowe Price | John Hancock vs. Ab Global Bond | John Hancock vs. Barings Global Floating |
| Franklin California vs. Virtus Seix Government | Franklin California vs. John Hancock Government | Franklin California vs. Government Securities Fund | Franklin California vs. Us Government Plus |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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