Correlation Between Schwab Large and John Hancock
Can any of the company-specific risk be diversified away by investing in both Schwab Large 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 Schwab Large and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Large Cap Growth and John Hancock Preferred, you can compare the effects of market volatilities on Schwab Large 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 Schwab Large with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Large and John Hancock.
Diversification Opportunities for Schwab Large and John Hancock
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Schwab and John is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Large Cap Growth and John Hancock Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Preferred and Schwab Large 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 Schwab Large Cap Growth 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 Preferred has no effect on the direction of Schwab Large i.e., Schwab Large and John Hancock go up and down completely randomly.
Pair Corralation between Schwab Large and John Hancock
Given the investment horizon of 90 days Schwab Large Cap Growth is expected to generate 1.48 times more return on investment than John Hancock. However, Schwab Large is 1.48 times more volatile than John Hancock Preferred. It trades about 0.07 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.03 per unit of risk. If you would invest 2,372 in Schwab Large Cap Growth on November 28, 2024 and sell it today you would earn a total of 367.00 from holding Schwab Large Cap Growth or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Large Cap Growth vs. John Hancock Preferred
Performance |
| Timeline |
| Schwab Large Cap |
| John Hancock Preferred |
Schwab Large and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Large and John Hancock
The main advantage of trading using opposite Schwab Large and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Large 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.| Schwab Large vs. Schwab Large Cap Value | Schwab Large vs. Schwab Large Cap ETF | Schwab Large vs. Schwab Small Cap ETF | Schwab Large vs. Schwab Broad Market |
| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Premium | John Hancock vs. Flaherty Crumrine Preferred | John Hancock vs. John Hancock Tax |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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