Correlation Between John Hancock and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both John Hancock and Vanguard Consumer 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 Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Exchange Traded and Vanguard Consumer Staples, you can compare the effects of market volatilities on John Hancock and Vanguard Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Vanguard Consumer.
Diversification Opportunities for John Hancock and Vanguard Consumer
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Vanguard is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Exchange Traded and Vanguard Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer Staples 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 Exchange Traded are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer Staples has no effect on the direction of John Hancock i.e., John Hancock and Vanguard Consumer go up and down completely randomly.
Pair Corralation between John Hancock and Vanguard Consumer
Given the investment horizon of 90 days John Hancock is expected to generate 3.58 times less return on investment than Vanguard Consumer. But when comparing it to its historical volatility, John Hancock Exchange Traded is 1.96 times less risky than Vanguard Consumer. It trades about 0.2 of its potential returns per unit of risk. Vanguard Consumer Staples is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 21,314 in Vanguard Consumer Staples on September 4, 2024 and sell it today you would earn a total of 1,028 from holding Vanguard Consumer Staples or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Exchange Traded vs. Vanguard Consumer Staples
Performance |
| Timeline |
| John Hancock Exchange |
| Vanguard Consumer Staples |
John Hancock and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Vanguard Consumer
The main advantage of trading using opposite John Hancock and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Vanguard Consumer 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 Consumer will offset losses from the drop in Vanguard Consumer's long position.| John Hancock vs. SSGA Active Trust | John Hancock vs. SPDR Nuveen Municipal | John Hancock vs. iShares Short Maturity | John Hancock vs. First Trust Flexible |
| Vanguard Consumer vs. Vanguard Consumer Discretionary | Vanguard Consumer vs. Vanguard Utilities Index | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Materials Index |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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