Correlation Between John Hancock and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both John Hancock and Vanguard Total 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 Vanguard Total 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 Vanguard Total Stock, you can compare the effects of market volatilities on John Hancock and Vanguard Total 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 Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Vanguard Total.
Diversification Opportunities for John Hancock and Vanguard Total
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between John and Vanguard is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of John Hancock i.e., John Hancock and Vanguard Total go up and down completely randomly.
Pair Corralation between John Hancock and Vanguard Total
Assuming the 90 days horizon John Hancock is expected to generate 19.23 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, John Hancock Government is 2.04 times less risky than Vanguard Total. It trades about 0.01 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 17,450 in Vanguard Total Stock on August 27, 2024 and sell it today you would earn a total of 9,637 from holding Vanguard Total Stock or generate 55.23% 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. Vanguard Total Stock
Performance |
| Timeline |
| John Hancock Government |
| Vanguard Total Stock |
John Hancock and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Vanguard Total
The main advantage of trading using opposite John Hancock and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total'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 |
| Vanguard Total vs. Blackrock Government Bond | Vanguard Total vs. Us Government Securities | Vanguard Total vs. John Hancock Government | Vanguard Total vs. Vanguard Short Term 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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