Correlation Between Western Asset and John Hancock
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and John Hancock Disciplined, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and John Hancock.
Diversification Opportunities for Western Asset and John Hancock
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and John is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E 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 Western Asset 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 Western Asset E 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 Western Asset i.e., Western Asset and John Hancock go up and down completely randomly.
Pair Corralation between Western Asset and John Hancock
Assuming the 90 days horizon Western Asset E is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset E is 2.63 times less risky than John Hancock. The mutual fund trades about -0.11 of its potential returns per unit of risk. The John Hancock Disciplined is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,653 in John Hancock Disciplined on August 28, 2024 and sell it today you would earn a total of 212.00 from holding John Hancock Disciplined or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset E vs. John Hancock Disciplined
Performance |
| Timeline |
| Western Asset E |
| John Hancock Disciplined |
Western Asset and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and John Hancock
The main advantage of trading using opposite Western Asset and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Fidelity Capital Income | Western Asset vs. Siit High Yield | Western Asset vs. Dunham High Yield | Western Asset vs. Pace High Yield |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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