Correlation Between John Hancock and Westwood Income
Can any of the company-specific risk be diversified away by investing in both John Hancock and Westwood Income 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 Westwood Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Investment and Westwood Income Opportunity, you can compare the effects of market volatilities on John Hancock and Westwood Income 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 Westwood Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Westwood Income.
Diversification Opportunities for John Hancock and Westwood Income
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and Westwood is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investment and Westwood Income Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Income Oppo 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 Investment are associated (or correlated) with Westwood Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Income Oppo has no effect on the direction of John Hancock i.e., John Hancock and Westwood Income go up and down completely randomly.
Pair Corralation between John Hancock and Westwood Income
Assuming the 90 days horizon John Hancock Investment is expected to generate 2.16 times more return on investment than Westwood Income. However, John Hancock is 2.16 times more volatile than Westwood Income Opportunity. It trades about 0.09 of its potential returns per unit of risk. Westwood Income Opportunity is currently generating about 0.15 per unit of risk. If you would invest 6,800 in John Hancock Investment on September 2, 2024 and sell it today you would earn a total of 1,452 from holding John Hancock Investment or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Investment vs. Westwood Income Opportunity
Performance |
| Timeline |
| John Hancock Investment |
| Westwood Income Oppo |
John Hancock and Westwood Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Westwood Income
The main advantage of trading using opposite John Hancock and Westwood Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Westwood Income 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 Westwood Income will offset losses from the drop in Westwood Income's long position.| John Hancock vs. Vanguard Total Stock | John Hancock vs. Vanguard 500 Index | John Hancock vs. Vanguard Total Stock | John Hancock vs. Vanguard Total Stock |
| Westwood Income vs. Dana Large Cap | Westwood Income vs. Tax Managed Large Cap | Westwood Income vs. Americafirst Large Cap | Westwood Income vs. John Hancock Investment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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