Correlation Between John Hancock and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both John Hancock and Gmo Trust 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 Trust 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 Trust , you can compare the effects of market volatilities on John Hancock and Gmo Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Gmo Trust.
Diversification Opportunities for John Hancock and Gmo Trust
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between John and Gmo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Trust has no effect on the direction of John Hancock i.e., John Hancock and Gmo Trust go up and down completely randomly.
Pair Corralation between John Hancock and Gmo Trust
Assuming the 90 days horizon John Hancock Government is expected to under-perform the Gmo Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, John Hancock Government is 3.31 times less risky than Gmo Trust. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Gmo Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,386 in Gmo Trust on August 25, 2024 and sell it today you would earn a total of 67.00 from holding Gmo Trust or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Government vs. Gmo Trust
Performance |
| Timeline |
| John Hancock Government |
| Gmo Trust |
John Hancock and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Gmo Trust
The main advantage of trading using opposite John Hancock and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Gmo Trust 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 Trust will offset losses from the drop in Gmo Trust'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 Trust vs. Us Government Securities | Gmo Trust vs. Fidelity Series Government | Gmo Trust vs. John Hancock Government | Gmo Trust vs. Franklin Adjustable Government |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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