Correlation Between Wells Fargo and John Hancock
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Mon and John Hancock Government, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and John Hancock.
Diversification Opportunities for Wells Fargo and John Hancock
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wells and John is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Mon and John Hancock Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Government and Wells Fargo 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 Wells Fargo Mon 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 Government has no effect on the direction of Wells Fargo i.e., Wells Fargo and John Hancock go up and down completely randomly.
Pair Corralation between Wells Fargo and John Hancock
Assuming the 90 days horizon Wells Fargo Mon is expected to under-perform the John Hancock. In addition to that, Wells Fargo is 2.62 times more volatile than John Hancock Government. It trades about -0.38 of its total potential returns per unit of risk. John Hancock Government is currently generating about 0.23 per unit of volatility. If you would invest 770.00 in John Hancock Government on November 28, 2024 and sell it today you would earn a total of 11.00 from holding John Hancock Government or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wells Fargo Mon vs. John Hancock Government
Performance |
| Timeline |
| Wells Fargo Mon |
| John Hancock Government |
Wells Fargo and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and John Hancock
The main advantage of trading using opposite Wells Fargo and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Transamerica Short Term Bond | Wells Fargo vs. Old Westbury Short Term | Wells Fargo vs. Ashmore Emerging Markets | Wells Fargo vs. Calvert Short Duration |
| John Hancock vs. Global Diversified Income | John Hancock vs. Calvert Conservative Allocation | John Hancock vs. American Funds Conservative | John Hancock vs. Federated Hermes Conservative |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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