Correlation Between 1919 Financial and John Hancock
Can any of the company-specific risk be diversified away by investing in both 1919 Financial 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 1919 Financial and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1919 Financial Services and John Hancock Financial, you can compare the effects of market volatilities on 1919 Financial 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 1919 Financial with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1919 Financial and John Hancock.
Diversification Opportunities for 1919 Financial and John Hancock
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between 1919 and John is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding 1919 Financial Services 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 1919 Financial 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 1919 Financial Services 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 1919 Financial i.e., 1919 Financial and John Hancock go up and down completely randomly.
Pair Corralation between 1919 Financial and John Hancock
Assuming the 90 days horizon 1919 Financial is expected to generate 1.79 times less return on investment than John Hancock. But when comparing it to its historical volatility, 1919 Financial Services is 1.19 times less risky than John Hancock. It trades about 0.24 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,409 in John Hancock Financial on August 28, 2024 and sell it today you would earn a total of 536.00 from holding John Hancock Financial or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
1919 Financial Services vs. John Hancock Financial
Performance |
| Timeline |
| 1919 Financial Services |
| John Hancock Financial |
1919 Financial and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1919 Financial and John Hancock
The main advantage of trading using opposite 1919 Financial and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1919 Financial 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.| 1919 Financial vs. Ultra Short Term Fixed | 1919 Financial vs. Ab Select Equity | 1919 Financial vs. The Hartford Equity | 1919 Financial vs. Artisan Select Equity |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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