Correlation Between John Hancock and First Eagle
Can any of the company-specific risk be diversified away by investing in both John Hancock and First Eagle 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 First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Bond and First Eagle Global, you can compare the effects of market volatilities on John Hancock and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and First Eagle.
Diversification Opportunities for John Hancock and First Eagle
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Bond and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global 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 Bond are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Global has no effect on the direction of John Hancock i.e., John Hancock and First Eagle go up and down completely randomly.
Pair Corralation between John Hancock and First Eagle
Assuming the 90 days horizon John Hancock Bond is expected to generate 0.75 times more return on investment than First Eagle. However, John Hancock Bond is 1.34 times less risky than First Eagle. It trades about 0.12 of its potential returns per unit of risk. First Eagle Global is currently generating about -0.22 per unit of risk. If you would invest 1,354 in John Hancock Bond on September 12, 2024 and sell it today you would earn a total of 10.00 from holding John Hancock Bond or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Bond vs. First Eagle Global
Performance |
| Timeline |
| John Hancock Bond |
| First Eagle Global |
John Hancock and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and First Eagle
The main advantage of trading using opposite John Hancock and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| John Hancock vs. Metropolitan West Total | John Hancock vs. SCOR PK | John Hancock vs. Morningstar Unconstrained Allocation | John Hancock vs. Thrivent High Yield |
| First Eagle vs. Dreyfusstandish Global Fixed | First Eagle vs. Pace High Yield | First Eagle vs. Blrc Sgy Mnp | First Eagle vs. Ishares Municipal Bond |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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