Correlation Between Investment and John Hancock
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Of America and John Hancock Financial, you can compare the effects of market volatilities on Investment 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 Investment with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and John Hancock.
Diversification Opportunities for Investment and John Hancock
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investment and John is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Investment Of America 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 Investment 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 Investment Of America 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 Investment i.e., Investment and John Hancock go up and down completely randomly.
Pair Corralation between Investment and John Hancock
Assuming the 90 days horizon Investment is expected to generate 12.48 times less return on investment than John Hancock. But when comparing it to its historical volatility, Investment Of America is 2.54 times less risky than John Hancock. It trades about 0.07 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,373 in John Hancock Financial on August 25, 2024 and sell it today you would earn a total of 522.00 from holding John Hancock Financial or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment Of America vs. John Hancock Financial
Performance |
| Timeline |
| Investment Of America |
| John Hancock Financial |
Investment and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and John Hancock
The main advantage of trading using opposite Investment and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. Prudential Jennison Financial | Investment vs. John Hancock Financial | Investment vs. Transamerica Financial Life | Investment vs. Goldman Sachs Financial |
| John Hancock vs. Tekla Life Sciences | John Hancock vs. Tekla World Healthcare | John Hancock vs. Tekla Healthcare Opportunities | John Hancock vs. Royce Value Closed |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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