Correlation Between Smead Value and John Hancock
Can any of the company-specific risk be diversified away by investing in both Smead Value 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 Smead Value and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead Value Fund and John Hancock Strategic, you can compare the effects of market volatilities on Smead Value 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 Smead Value with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and John Hancock.
Diversification Opportunities for Smead Value and John Hancock
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and John is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and John Hancock Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Strategic and Smead Value 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 Smead Value Fund 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 Strategic has no effect on the direction of Smead Value i.e., Smead Value and John Hancock go up and down completely randomly.
Pair Corralation between Smead Value and John Hancock
Assuming the 90 days horizon Smead Value is expected to generate 1.32 times less return on investment than John Hancock. But when comparing it to its historical volatility, Smead Value Fund is 1.63 times less risky than John Hancock. It trades about 0.14 of its potential returns per unit of risk. John Hancock Strategic is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,668 in John Hancock Strategic on November 3, 2024 and sell it today you would earn a total of 82.00 from holding John Hancock Strategic or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. John Hancock Strategic
Performance |
| Timeline |
| Smead Value Fund |
| John Hancock Strategic |
Smead Value and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and John Hancock
The main advantage of trading using opposite Smead Value and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value 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.| Smead Value vs. Matthew 25 Fund | Smead Value vs. Baron Real Estate | Smead Value vs. Buffalo Emerging Opportunities | Smead Value vs. Eventide Gilead Fund |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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