Correlation Between John Hancock and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both John Hancock and BNY Mellon 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 BNY Mellon 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 BNY Mellon Strategic, you can compare the effects of market volatilities on John Hancock and BNY Mellon 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 BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and BNY Mellon.
Diversification Opportunities for John Hancock and BNY Mellon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and BNY is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and BNY Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Strategic 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Strategic has no effect on the direction of John Hancock i.e., John Hancock and BNY Mellon go up and down completely randomly.
Pair Corralation between John Hancock and BNY Mellon
Considering the 90-day investment horizon John Hancock Income is expected to generate 0.83 times more return on investment than BNY Mellon. However, John Hancock Income is 1.2 times less risky than BNY Mellon. It trades about 0.26 of its potential returns per unit of risk. BNY Mellon Strategic is currently generating about 0.2 per unit of risk. If you would invest 1,140 in John Hancock Income on September 13, 2024 and sell it today you would earn a total of 28.00 from holding John Hancock Income or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Income vs. BNY Mellon Strategic
Performance |
| Timeline |
| John Hancock Income |
| BNY Mellon Strategic |
John Hancock and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and BNY Mellon
The main advantage of trading using opposite John Hancock and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon'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 |
| BNY Mellon vs. Blackrock Muniholdings Closed | BNY Mellon vs. DTF Tax Free | BNY Mellon vs. John Hancock Income | BNY Mellon 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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