Correlation Between John Hancock and Pace Smallmedium
Can any of the company-specific risk be diversified away by investing in both John Hancock and Pace Smallmedium 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 Pace Smallmedium 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 Pace Smallmedium Value, you can compare the effects of market volatilities on John Hancock and Pace Smallmedium 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 Pace Smallmedium. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Pace Smallmedium.
Diversification Opportunities for John Hancock and Pace Smallmedium
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between John and Pace is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Focused and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value 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 Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of John Hancock i.e., John Hancock and Pace Smallmedium go up and down completely randomly.
Pair Corralation between John Hancock and Pace Smallmedium
Assuming the 90 days horizon John Hancock is expected to generate 4.11 times less return on investment than Pace Smallmedium. But when comparing it to its historical volatility, John Hancock Focused is 6.25 times less risky than Pace Smallmedium. It trades about 0.12 of its potential returns per unit of risk. Pace Smallmedium Value is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,010 in Pace Smallmedium Value on September 16, 2024 and sell it today you would earn a total of 26.00 from holding Pace Smallmedium Value or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Focused vs. Pace Smallmedium Value
Performance |
| Timeline |
| John Hancock Focused |
| Pace Smallmedium Value |
John Hancock and Pace Smallmedium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Pace Smallmedium
The main advantage of trading using opposite John Hancock and Pace Smallmedium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Pace Smallmedium 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 Pace Smallmedium will offset losses from the drop in Pace Smallmedium's long position.| John Hancock vs. Pace Smallmedium Value | John Hancock vs. Df Dent Small | John Hancock vs. Kinetics Small Cap | John Hancock vs. Glg Intl Small |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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