Correlation Between John Hancock and European Equity
Can any of the company-specific risk be diversified away by investing in both John Hancock and European Equity 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 European Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Income and European Equity Closed, you can compare the effects of market volatilities on John Hancock and European Equity 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 European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and European Equity.
Diversification Opportunities for John Hancock and European Equity
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and European is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed 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 Income are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of John Hancock i.e., John Hancock and European Equity go up and down completely randomly.
Pair Corralation between John Hancock and European Equity
Considering the 90-day investment horizon John Hancock Income is expected to under-perform the European Equity. But the stock apears to be less risky and, when comparing its historical volatility, John Hancock Income is 1.56 times less risky than European Equity. The stock trades about -0.02 of its potential returns per unit of risk. The European Equity Closed is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 814.00 in European Equity Closed on November 3, 2024 and sell it today you would earn a total of 56.00 from holding European Equity Closed or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
John Hancock Income vs. European Equity Closed
Performance |
| Timeline |
| John Hancock Income |
| European Equity Closed |
John Hancock and European Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and European Equity
The main advantage of trading using opposite John Hancock and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.| John Hancock vs. MFS High Income | John Hancock vs. MFS Investment Grade | John Hancock vs. Blackrock Muniholdings Closed | John Hancock vs. Eaton Vance National |
| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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