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 Shapiro, 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
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 Shapiro 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 0.97 times more return on investment than American Beacon. However, John Hancock Disciplined is 1.03 times less risky than American Beacon. It trades about -0.07 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.09 per unit of risk. If you would invest 3,028 in John Hancock Disciplined on September 13, 2024 and sell it today you would lose (28.00) from holding John Hancock Disciplined or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
John Hancock Disciplined vs. American Beacon Shapiro
Performance |
| Timeline |
| John Hancock Disciplined |
| American Beacon Shapiro |
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. John Hancock Disciplined | John Hancock vs. John Hancock Bond | John Hancock vs. Us Global Leaders | John Hancock vs. Mfs International Value |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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