Correlation Between John Hancock and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both John Hancock and Franklin Templeton 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 Franklin Templeton 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 Franklin Templeton Limited, you can compare the effects of market volatilities on John Hancock and Franklin Templeton 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 Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin Templeton.
Diversification Opportunities for John Hancock and Franklin Templeton
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton 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 Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of John Hancock i.e., John Hancock and Franklin Templeton go up and down completely randomly.
Pair Corralation between John Hancock and Franklin Templeton
Considering the 90-day investment horizon John Hancock is expected to generate 1.36 times less return on investment than Franklin Templeton. But when comparing it to its historical volatility, John Hancock Income is 1.08 times less risky than Franklin Templeton. It trades about 0.08 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 566.00 in Franklin Templeton Limited on August 27, 2024 and sell it today you would earn a total of 94.00 from holding Franklin Templeton Limited or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Income vs. Franklin Templeton Limited
Performance |
| Timeline |
| John Hancock Income |
| Franklin Templeton |
John Hancock and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Franklin Templeton
The main advantage of trading using opposite John Hancock and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin Templeton 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 Franklin Templeton will offset losses from the drop in Franklin Templeton's long position.| John Hancock vs. PowerUp Acquisition Corp | John Hancock vs. Aurora Innovation | John Hancock vs. HUMANA INC | John Hancock vs. Aquagold International |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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