Correlation Between John Hancock and American Beacon
Can any of the company-specific risk be diversified away by investing in both John Hancock and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Disciplined and American Beacon Bridgeway, you can compare the effects of market volatilities on John Hancock and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and American Beacon.
Diversification Opportunities for John Hancock and American Beacon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway 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 Disciplined are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Bridgeway has no effect on the direction of John Hancock i.e., John Hancock and American Beacon go up and down completely randomly.
Pair Corralation between John Hancock and American Beacon
Assuming the 90 days horizon John Hancock Disciplined is expected to generate 0.99 times more return on investment than American Beacon. However, John Hancock Disciplined is 1.01 times less risky than American Beacon. It trades about 0.22 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.2 per unit of risk. If you would invest 2,722 in John Hancock Disciplined on August 26, 2024 and sell it today you would earn a total of 143.00 from holding John Hancock Disciplined or generate 5.25% 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 Disciplined vs. American Beacon Bridgeway
Performance |
| Timeline |
| John Hancock Disciplined |
| American Beacon Bridgeway |
John Hancock and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and American Beacon
The main advantage of trading using opposite John Hancock and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| John Hancock vs. Barings Active Short | John Hancock vs. Versatile Bond Portfolio | John Hancock vs. Multisector Bond Sma | John Hancock vs. Rbc Bluebay Global |
| American Beacon vs. Amg Managers Skyline | American Beacon vs. The Hartford International | American Beacon vs. Baird E Plus | American Beacon vs. Artisan Developing World |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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