Correlation Between Smallcap Growth and John Hancock
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth 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 Smallcap Growth and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and John Hancock Global, you can compare the effects of market volatilities on Smallcap Growth 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 Smallcap Growth with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and John Hancock.
Diversification Opportunities for Smallcap Growth and John Hancock
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Smallcap and John is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Smallcap Growth 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 Smallcap Growth Fund 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 Global has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and John Hancock go up and down completely randomly.
Pair Corralation between Smallcap Growth and John Hancock
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 3.04 times more return on investment than John Hancock. However, Smallcap Growth is 3.04 times more volatile than John Hancock Global. It trades about 0.27 of its potential returns per unit of risk. John Hancock Global is currently generating about 0.18 per unit of risk. If you would invest 1,593 in Smallcap Growth Fund on September 4, 2024 and sell it today you would earn a total of 135.00 from holding Smallcap Growth Fund or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. John Hancock Global
Performance |
| Timeline |
| Smallcap Growth |
| John Hancock Global |
Smallcap Growth and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and John Hancock
The main advantage of trading using opposite Smallcap Growth and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth 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.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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