Correlation Between John Hancock and Cutler Equity
Can any of the company-specific risk be diversified away by investing in both John Hancock and Cutler 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 Cutler Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Focused and Cutler Equity, you can compare the effects of market volatilities on John Hancock and Cutler 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 Cutler Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Cutler Equity.
Diversification Opportunities for John Hancock and Cutler Equity
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Cutler is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Focused and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity 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 Focused are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of John Hancock i.e., John Hancock and Cutler Equity go up and down completely randomly.
Pair Corralation between John Hancock and Cutler Equity
Assuming the 90 days horizon John Hancock is expected to generate 1.42 times less return on investment than Cutler Equity. But when comparing it to its historical volatility, John Hancock Focused is 2.3 times less risky than Cutler Equity. It trades about 0.11 of its potential returns per unit of risk. Cutler Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,295 in Cutler Equity on September 17, 2024 and sell it today you would earn a total of 570.00 from holding Cutler Equity or generate 24.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Focused vs. Cutler Equity
Performance |
| Timeline |
| John Hancock Focused |
| Cutler Equity |
John Hancock and Cutler Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Cutler Equity
The main advantage of trading using opposite John Hancock and Cutler Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Cutler 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 Cutler Equity will offset losses from the drop in Cutler Equity's long position.| John Hancock vs. Cutler Equity | John Hancock vs. Qs International Equity | John Hancock vs. Sarofim Equity | John Hancock vs. Locorr Dynamic Equity |
| Cutler Equity vs. Upright Assets Allocation | Cutler Equity vs. Qs Large Cap | Cutler Equity vs. Falcon Focus Scv | Cutler Equity vs. Aqr Large Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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