Correlation Between John Hancock and State Street
Can any of the company-specific risk be diversified away by investing in both John Hancock and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on John Hancock and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and State Street.
Diversification Opportunities for John Hancock and State Street
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between John and State is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of John Hancock i.e., John Hancock and State Street go up and down completely randomly.
Pair Corralation between John Hancock and State Street
Assuming the 90 days horizon John Hancock is expected to generate 4.6 times less return on investment than State Street. In addition to that, John Hancock is 1.35 times more volatile than State Street Target. It trades about 0.05 of its total potential returns per unit of risk. State Street Target is currently generating about 0.31 per unit of volatility. If you would invest 1,139 in State Street Target on September 1, 2024 and sell it today you would earn a total of 21.00 from holding State Street Target or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Government vs. State Street Target
Performance |
| Timeline |
| John Hancock Government |
| State Street Target |
John Hancock and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and State Street
The main advantage of trading using opposite John Hancock and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| John Hancock vs. Goldman Sachs Clean | John Hancock vs. Gold And Precious | John Hancock vs. James Balanced Golden | John Hancock vs. Vy Goldman Sachs |
| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Aggregate |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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