Correlation Between Vanguard Extended and John Hancock
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Vanguard Extended and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and John Hancock Multifactor, you can compare the effects of market volatilities on Vanguard Extended 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 Vanguard Extended with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and John Hancock.
Diversification Opportunities for Vanguard Extended and John Hancock
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and John is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and John Hancock Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Multifactor and Vanguard Extended 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 Vanguard Extended Market 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 Multifactor has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and John Hancock go up and down completely randomly.
Pair Corralation between Vanguard Extended and John Hancock
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.37 times more return on investment than John Hancock. However, Vanguard Extended is 1.37 times more volatile than John Hancock Multifactor. It trades about 0.29 of its potential returns per unit of risk. John Hancock Multifactor is currently generating about 0.24 per unit of risk. If you would invest 18,330 in Vanguard Extended Market on August 24, 2024 and sell it today you would earn a total of 1,670 from holding Vanguard Extended Market or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. John Hancock Multifactor
Performance |
| Timeline |
| Vanguard Extended Market |
| John Hancock Multifactor |
Vanguard Extended and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and John Hancock
The main advantage of trading using opposite Vanguard Extended and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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.| Vanguard Extended vs. Vanguard Large Cap Index | Vanguard Extended vs. Vanguard Small Cap Growth | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Growth |
| John Hancock vs. John Hancock Multifactor | John Hancock vs. JPMorgan Diversified Return | John Hancock vs. JPMorgan Diversified Return | John Hancock vs. JPMorgan Diversified Return |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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