Correlation Between John Hancock and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both John Hancock and DWS Municipal 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 DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Investors and DWS Municipal Income, you can compare the effects of market volatilities on John Hancock and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and DWS Municipal.
Diversification Opportunities for John Hancock and DWS Municipal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and DWS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investors and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 Investors are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of John Hancock i.e., John Hancock and DWS Municipal go up and down completely randomly.
Pair Corralation between John Hancock and DWS Municipal
Considering the 90-day investment horizon John Hancock Investors is expected to generate 1.22 times more return on investment than DWS Municipal. However, John Hancock is 1.22 times more volatile than DWS Municipal Income. It trades about 0.06 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.07 per unit of risk. If you would invest 1,111 in John Hancock Investors on August 30, 2024 and sell it today you would earn a total of 307.00 from holding John Hancock Investors or generate 27.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Investors vs. DWS Municipal Income
Performance |
| Timeline |
| John Hancock Investors |
| DWS Municipal Income |
John Hancock and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and DWS Municipal
The main advantage of trading using opposite John Hancock and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| John Hancock vs. DTF Tax Free | John Hancock vs. MFS Investment Grade | John Hancock vs. Eaton Vance National | John Hancock vs. Invesco High Income |
| DWS Municipal vs. Invesco High Income | DWS Municipal vs. Blackrock Muniholdings Ny | DWS Municipal vs. Nuveen California Select | DWS Municipal vs. MFS Investment Grade |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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