Correlation Between John Hancock and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both John Hancock and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime 2040, you can compare the effects of market volatilities on John Hancock and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Principal Lifetime.
Diversification Opportunities for John Hancock and Principal Lifetime
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between John and Principal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Principal Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime 2040 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime 2040 has no effect on the direction of John Hancock i.e., John Hancock and Principal Lifetime go up and down completely randomly.
Pair Corralation between John Hancock and Principal Lifetime
Assuming the 90 days horizon John Hancock is expected to generate 5.38 times less return on investment than Principal Lifetime. But when comparing it to its historical volatility, John Hancock Government is 1.78 times less risky than Principal Lifetime. It trades about 0.02 of its potential returns per unit of risk. Principal Lifetime 2040 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,453 in Principal Lifetime 2040 on September 4, 2024 and sell it today you would earn a total of 254.00 from holding Principal Lifetime 2040 or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
John Hancock Government vs. Principal Lifetime 2040
Performance |
| Timeline |
| John Hancock Government |
| Principal Lifetime 2040 |
John Hancock and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Principal Lifetime
The main advantage of trading using opposite John Hancock and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime'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 |
| Principal Lifetime vs. Small Cap Value | Principal Lifetime vs. Touchstone Small Cap | Principal Lifetime vs. Ancorathelen Small Mid Cap | Principal Lifetime vs. Qs Small Capitalization |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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