Correlation Between Lifestyle and John Hancock
Can any of the company-specific risk be diversified away by investing in both Lifestyle and John Hancock 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 Lifestyle and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and John Hancock Disciplined, you can compare the effects of market volatilities on Lifestyle and John Hancock 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 Lifestyle with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and John Hancock.
Diversification Opportunities for Lifestyle and John Hancock
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifestyle and John is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Disciplined has no effect on the direction of Lifestyle i.e., Lifestyle and John Hancock go up and down completely randomly.
Pair Corralation between Lifestyle and John Hancock
Assuming the 90 days horizon Lifestyle is expected to generate 3.75 times less return on investment than John Hancock. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 3.04 times less risky than John Hancock. It trades about 0.17 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,729 in John Hancock Disciplined on August 30, 2024 and sell it today you would earn a total of 136.00 from holding John Hancock Disciplined or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. John Hancock Disciplined
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| John Hancock Disciplined |
Lifestyle and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and John Hancock
The main advantage of trading using opposite Lifestyle and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.| Lifestyle vs. Hennessy Large Cap | Lifestyle vs. T Rowe Price | Lifestyle vs. Davis Financial Fund | Lifestyle vs. Pimco Capital Sec |
| John Hancock vs. Saat Moderate Strategy | John Hancock vs. Lifestyle Ii Moderate | John Hancock vs. Calvert Moderate Allocation | John Hancock vs. Blackrock Moderate Prepared |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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