Correlation Between John Hancock and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both John Hancock and Wells Fargo 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 Wells Fargo 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 Wells Fargo Ultra, you can compare the effects of market volatilities on John Hancock and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Wells Fargo.
Diversification Opportunities for John Hancock and Wells Fargo
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between John and Wells is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Wells Fargo Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Ultra 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Ultra has no effect on the direction of John Hancock i.e., John Hancock and Wells Fargo go up and down completely randomly.
Pair Corralation between John Hancock and Wells Fargo
Assuming the 90 days horizon John Hancock Government is expected to generate 5.51 times more return on investment than Wells Fargo. However, John Hancock is 5.51 times more volatile than Wells Fargo Ultra. It trades about 0.15 of its potential returns per unit of risk. Wells Fargo Ultra is currently generating about 0.08 per unit of risk. If you would invest 777.00 in John Hancock Government on September 2, 2024 and sell it today you would earn a total of 9.00 from holding John Hancock Government or generate 1.16% 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. Wells Fargo Ultra
Performance |
| Timeline |
| John Hancock Government |
| Wells Fargo Ultra |
John Hancock and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Wells Fargo
The main advantage of trading using opposite John Hancock and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| John Hancock vs. Volumetric Fund Volumetric | John Hancock vs. Rbc Microcap Value | John Hancock vs. T Rowe Price | John Hancock vs. Falcon Focus Scv |
| Wells Fargo vs. Us Government Securities | Wells Fargo vs. Franklin Adjustable Government | Wells Fargo vs. Dunham Porategovernment Bond | Wells Fargo vs. John Hancock 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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