Correlation Between US Treasury and John Hancock
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and John Hancock Hedged, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and John Hancock.
Diversification Opportunities for US Treasury and John Hancock
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBIL and John is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and John Hancock Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Hedged and US Treasury 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 US Treasury 12 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 Hedged has no effect on the direction of US Treasury i.e., US Treasury and John Hancock go up and down completely randomly.
Pair Corralation between US Treasury and John Hancock
Given the investment horizon of 90 days US Treasury is expected to generate 5.3 times less return on investment than John Hancock. But when comparing it to its historical volatility, US Treasury 12 is 29.6 times less risky than John Hancock. It trades about 0.86 of its potential returns per unit of risk. John Hancock Hedged is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,032 in John Hancock Hedged on November 7, 2024 and sell it today you would earn a total of 18.00 from holding John Hancock Hedged or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
US Treasury 12 vs. John Hancock Hedged
Performance |
| Timeline |
| US Treasury 12 |
| John Hancock Hedged |
US Treasury and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and John Hancock
The main advantage of trading using opposite US Treasury and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
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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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