Correlation Between Metropolitan West and John Hancock
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and John Hancock Bond, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and John Hancock.
Diversification Opportunities for Metropolitan West and John Hancock
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Metropolitan and John is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and John Hancock Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Bond and Metropolitan West 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 Metropolitan West Total 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 Bond has no effect on the direction of Metropolitan West i.e., Metropolitan West and John Hancock go up and down completely randomly.
Pair Corralation between Metropolitan West and John Hancock
Assuming the 90 days horizon Metropolitan West Total is expected to generate 1.12 times more return on investment than John Hancock. However, Metropolitan West is 1.12 times more volatile than John Hancock Bond. It trades about 0.12 of its potential returns per unit of risk. John Hancock Bond is currently generating about 0.13 per unit of risk. If you would invest 903.00 in Metropolitan West Total on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Metropolitan West Total or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. John Hancock Bond
Performance |
| Timeline |
| Metropolitan West Total |
| John Hancock Bond |
Metropolitan West and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and John Hancock
The main advantage of trading using opposite Metropolitan West and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Live Oak Health | Metropolitan West vs. Eventide Healthcare Life | Metropolitan West vs. Alger Health Sciences | Metropolitan West vs. Alphacentric Lifesci Healthcare |
| John Hancock vs. Metropolitan West Total | John Hancock vs. Metropolitan West Total | John Hancock vs. Pimco Total Return | John Hancock vs. Total Return Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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