Correlation Between Pax Small and John Hancock
Can any of the company-specific risk be diversified away by investing in both Pax Small 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 Pax Small and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Small Cap and John Hancock Esg, you can compare the effects of market volatilities on Pax Small 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 Pax Small with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Small and John Hancock.
Diversification Opportunities for Pax Small and John Hancock
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pax and John is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pax Small Cap and John Hancock Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Esg and Pax Small 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 Pax Small Cap 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 Esg has no effect on the direction of Pax Small i.e., Pax Small and John Hancock go up and down completely randomly.
Pair Corralation between Pax Small and John Hancock
Assuming the 90 days horizon Pax Small Cap is expected to generate 1.77 times more return on investment than John Hancock. However, Pax Small is 1.77 times more volatile than John Hancock Esg. It trades about 0.29 of its potential returns per unit of risk. John Hancock Esg is currently generating about 0.15 per unit of risk. If you would invest 1,835 in Pax Small Cap on August 29, 2024 and sell it today you would earn a total of 162.00 from holding Pax Small Cap or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Small Cap vs. John Hancock Esg
Performance |
| Timeline |
| Pax Small Cap |
| John Hancock Esg |
Pax Small and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Small and John Hancock
The main advantage of trading using opposite Pax Small and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Small 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.| Pax Small vs. Pax Global Environmental | Pax Small vs. Pax Esg Beta | Pax Small vs. Pax Msci Eafe | Pax Small vs. Pax High Yield |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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