Correlation Between John Hancock and Gmo Core
Can any of the company-specific risk be diversified away by investing in both John Hancock and Gmo Core 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 Gmo Core 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 Gmo E Plus, you can compare the effects of market volatilities on John Hancock and Gmo Core 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 Gmo Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Gmo Core.
Diversification Opportunities for John Hancock and Gmo Core
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between John and Gmo is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Gmo E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo E Plus 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 Gmo Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo E Plus has no effect on the direction of John Hancock i.e., John Hancock and Gmo Core go up and down completely randomly.
Pair Corralation between John Hancock and Gmo Core
Assuming the 90 days horizon John Hancock is expected to generate 1.3 times less return on investment than Gmo Core. In addition to that, John Hancock is 1.05 times more volatile than Gmo E Plus. It trades about 0.05 of its total potential returns per unit of risk. Gmo E Plus is currently generating about 0.07 per unit of volatility. If you would invest 1,778 in Gmo E Plus on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Gmo E Plus or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Government vs. Gmo E Plus
Performance |
| Timeline |
| John Hancock Government |
| Gmo E Plus |
John Hancock and Gmo Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Gmo Core
The main advantage of trading using opposite John Hancock and Gmo Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Gmo Core 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 Gmo Core will offset losses from the drop in Gmo Core'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 |
| Gmo Core vs. Eic Value Fund | Gmo Core vs. Archer Balanced Fund | Gmo Core vs. Vanguard Strategic Small Cap | Gmo Core vs. Ab E Opportunities |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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