Correlation Between John Hancock and Prudential Real
Can any of the company-specific risk be diversified away by investing in both John Hancock and Prudential Real 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 Real 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 Real Estate, you can compare the effects of market volatilities on John Hancock and Prudential Real 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 Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Prudential Real.
Diversification Opportunities for John Hancock and Prudential Real
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Prudential is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Global and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Real Estate 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of John Hancock i.e., John Hancock and Prudential Real go up and down completely randomly.
Pair Corralation between John Hancock and Prudential Real
Assuming the 90 days horizon John Hancock is expected to generate 1.43 times less return on investment than Prudential Real. But when comparing it to its historical volatility, John Hancock Global is 1.44 times less risky than Prudential Real. It trades about 0.11 of its potential returns per unit of risk. Prudential Real Estate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 597.00 in Prudential Real Estate on September 12, 2024 and sell it today you would earn a total of 206.00 from holding Prudential Real Estate or generate 34.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Global vs. Prudential Real Estate
Performance |
| Timeline |
| John Hancock Global |
| Prudential Real Estate |
John Hancock and Prudential Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Prudential Real
The main advantage of trading using opposite John Hancock and Prudential Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Prudential Real 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 Real will offset losses from the drop in Prudential Real's long position.| John Hancock vs. Prudential Real Estate | John Hancock vs. Fidelity Real Estate | John Hancock vs. Dunham Real Estate | John Hancock vs. Short Real Estate |
| Prudential Real vs. Dws Government Money | Prudential Real vs. California High Yield Municipal | Prudential Real vs. Baird Strategic Municipal | Prudential Real vs. Nuveen Minnesota Municipal |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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