Correlation Between John Hancock and Prudential Core
Can any of the company-specific risk be diversified away by investing in both John Hancock and Prudential Core 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 Prudential Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Global and Prudential Core Conservative, you can compare the effects of market volatilities on John Hancock and Prudential Core 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 Prudential Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Prudential Core.
Diversification Opportunities for John Hancock and Prudential Core
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between John and Prudential is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Global and Prudential Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Core Cons 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 Global are associated (or correlated) with Prudential Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Core Cons has no effect on the direction of John Hancock i.e., John Hancock and Prudential Core go up and down completely randomly.
Pair Corralation between John Hancock and Prudential Core
Assuming the 90 days horizon John Hancock Global is expected to generate 1.62 times more return on investment than Prudential Core. However, John Hancock is 1.62 times more volatile than Prudential Core Conservative. It trades about 0.13 of its potential returns per unit of risk. Prudential Core Conservative is currently generating about 0.06 per unit of risk. If you would invest 1,034 in John Hancock Global on September 4, 2024 and sell it today you would earn a total of 218.00 from holding John Hancock Global or generate 21.08% 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 Global vs. Prudential Core Conservative
Performance |
| Timeline |
| John Hancock Global |
| Prudential Core Cons |
John Hancock and Prudential Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Prudential Core
The main advantage of trading using opposite John Hancock and Prudential Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Prudential Core 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 Prudential Core will offset losses from the drop in Prudential Core'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 |
| Prudential Core vs. Lord Abbett High | Prudential Core vs. Pioneer High Yield | Prudential Core vs. Dunham High Yield | Prudential Core vs. Guggenheim High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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