Correlation Between Western Asset and John Hancock
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and John Hancock Income, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and John Hancock.
Diversification Opportunities for Western Asset and John Hancock
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and John is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and Western Asset 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 Western Asset Managed 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 Income has no effect on the direction of Western Asset i.e., Western Asset and John Hancock go up and down completely randomly.
Pair Corralation between Western Asset and John Hancock
Considering the 90-day investment horizon Western Asset Managed is expected to generate 1.29 times more return on investment than John Hancock. However, Western Asset is 1.29 times more volatile than John Hancock Income. It trades about 0.23 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.08 per unit of risk. If you would invest 1,036 in Western Asset Managed on September 1, 2024 and sell it today you would earn a total of 31.00 from holding Western Asset Managed or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. John Hancock Income
Performance |
| Timeline |
| Western Asset Managed |
| John Hancock Income |
Western Asset and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and John Hancock
The main advantage of trading using opposite Western Asset and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Western Asset Municipal | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
| John Hancock vs. MFS High Income | John Hancock vs. MFS Investment Grade | John Hancock vs. Blackrock Muniholdings Closed | John Hancock vs. Eaton Vance National |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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