Correlation Between John Hancock and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both John Hancock and Stone Ridge 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 Stone Ridge 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 Stone Ridge Diversified, you can compare the effects of market volatilities on John Hancock and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Stone Ridge.
Diversification Opportunities for John Hancock and Stone Ridge
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between John and Stone is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Focused and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of John Hancock i.e., John Hancock and Stone Ridge go up and down completely randomly.
Pair Corralation between John Hancock and Stone Ridge
Assuming the 90 days horizon John Hancock is expected to generate 5.65 times less return on investment than Stone Ridge. But when comparing it to its historical volatility, John Hancock Focused is 1.16 times less risky than Stone Ridge. It trades about 0.12 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 1,125 in Stone Ridge Diversified on September 15, 2024 and sell it today you would earn a total of 21.00 from holding Stone Ridge Diversified or generate 1.87% 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. Stone Ridge Diversified
Performance |
| Timeline |
| John Hancock Focused |
| Stone Ridge Diversified |
John Hancock and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Stone Ridge
The main advantage of trading using opposite John Hancock and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
| Stone Ridge vs. Stone Ridge High | Stone Ridge vs. Stone Ridge High | Stone Ridge vs. Red Oak Technology | Stone Ridge vs. John Hancock Focused |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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