Correlation Between John Hancock and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both John Hancock and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Fund, you can compare the effects of market volatilities on John Hancock and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Longleaf Partners.
Diversification Opportunities for John Hancock and Longleaf Partners
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Longleaf is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of John Hancock i.e., John Hancock and Longleaf Partners go up and down completely randomly.
Pair Corralation between John Hancock and Longleaf Partners
Assuming the 90 days horizon John Hancock Disciplined is expected to generate 1.43 times more return on investment than Longleaf Partners. However, John Hancock is 1.43 times more volatile than Longleaf Partners Fund. It trades about 0.15 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.12 per unit of risk. If you would invest 2,914 in John Hancock Disciplined on August 28, 2024 and sell it today you would earn a total of 161.00 from holding John Hancock Disciplined or generate 5.53% 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. Longleaf Partners Fund
Performance |
| Timeline |
| John Hancock Disciplined |
| Longleaf Partners |
John Hancock and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Longleaf Partners
The main advantage of trading using opposite John Hancock and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Northern Institutional Funds | Longleaf Partners vs. Dreyfus Yield Enhancement |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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