Correlation Between Rational Special and John Hancock
Can any of the company-specific risk be diversified away by investing in both Rational Special 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 Rational Special and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Special Situations and John Hancock Financial, you can compare the effects of market volatilities on Rational Special 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 Rational Special with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Special and John Hancock.
Diversification Opportunities for Rational Special and John Hancock
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rational and John is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rational Special Situations and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Rational Special 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 Rational Special Situations 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 Financial has no effect on the direction of Rational Special i.e., Rational Special and John Hancock go up and down completely randomly.
Pair Corralation between Rational Special and John Hancock
Assuming the 90 days horizon Rational Special is expected to generate 13.54 times less return on investment than John Hancock. But when comparing it to its historical volatility, Rational Special Situations is 14.32 times less risky than John Hancock. It trades about 0.21 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,688 in John Hancock Financial on August 29, 2024 and sell it today you would earn a total of 1,240 from holding John Hancock Financial or generate 46.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rational Special Situations vs. John Hancock Financial
Performance |
| Timeline |
| Rational Special Sit |
| John Hancock Financial |
Rational Special and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Special and John Hancock
The main advantage of trading using opposite Rational Special and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Special 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.| Rational Special vs. John Hancock Financial | Rational Special vs. Vanguard Financials Index | Rational Special vs. 1919 Financial Services | Rational Special vs. Royce Global Financial |
| John Hancock vs. Gabelli Global Small | John Hancock vs. MFS Investment Grade | John Hancock vs. Eaton Vance National | John Hancock vs. GAMCO Natural Resources |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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