Correlation Between John Hancock and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both John Hancock and Hotchkis Wiley 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 Hotchkis Wiley 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 Hotchkis Wiley Mid Cap, you can compare the effects of market volatilities on John Hancock and Hotchkis Wiley 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 Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Hotchkis Wiley.
Diversification Opportunities for John Hancock and Hotchkis Wiley
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Hotchkis is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Hotchkis Wiley Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Mid 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 Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Mid has no effect on the direction of John Hancock i.e., John Hancock and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between John Hancock and Hotchkis Wiley
Assuming the 90 days horizon John Hancock is expected to generate 1.25 times less return on investment than Hotchkis Wiley. But when comparing it to its historical volatility, John Hancock Disciplined is 1.3 times less risky than Hotchkis Wiley. It trades about 0.05 of its potential returns per unit of risk. Hotchkis Wiley Mid Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,537 in Hotchkis Wiley Mid Cap on August 24, 2024 and sell it today you would earn a total of 1,339 from holding Hotchkis Wiley Mid Cap or generate 29.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Disciplined vs. Hotchkis Wiley Mid Cap
Performance |
| Timeline |
| John Hancock Disciplined |
| Hotchkis Wiley Mid |
John Hancock and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Hotchkis Wiley
The main advantage of trading using opposite John Hancock and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| John Hancock vs. John Hancock Disciplined | John Hancock vs. John Hancock Bond | John Hancock vs. Us Global Leaders | John Hancock vs. Mfs International Value |
| Hotchkis Wiley vs. Inverse Government Long | Hotchkis Wiley vs. Blackrock Government Bond | Hotchkis Wiley vs. Us Government Securities | Hotchkis Wiley vs. Virtus Seix Government |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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