Correlation Between Visa and John Hancock
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and John Hancock Disciplined, you can compare the effects of market volatilities on Visa 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 Visa with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and John Hancock.
Diversification Opportunities for Visa and John Hancock
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and JOHN is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Visa 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 Visa Class A 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 Disciplined has no effect on the direction of Visa i.e., Visa and John Hancock go up and down completely randomly.
Pair Corralation between Visa and John Hancock
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.1 times more return on investment than John Hancock. However, Visa is 1.1 times more volatile than John Hancock Disciplined. It trades about 0.35 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.28 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. John Hancock Disciplined
Performance |
| Timeline |
| Visa Class A |
| John Hancock Disciplined |
Visa and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and John Hancock
The main advantage of trading using opposite Visa and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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