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 Special and John Hancock Disciplined, 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
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and John is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Special 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 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 Special 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 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 is expected to generate 1.46 times less return on investment than John Hancock. But when comparing it to its historical volatility, Wells Fargo Special is 1.1 times less risky than John Hancock. It trades about 0.08 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,319 in John Hancock Disciplined on August 26, 2024 and sell it today you would earn a total of 906.00 from holding John Hancock Disciplined or generate 39.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Special vs. John Hancock Disciplined
Performance |
| Timeline |
| Wells Fargo Special |
| John Hancock Disciplined |
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. Wells Fargo Emerging | Wells Fargo vs. The Hartford Midcap | Wells Fargo vs. Mfs Value Fund | Wells Fargo vs. Mfs Mid Cap |
| John Hancock vs. New World Fund | John Hancock vs. Bond Fund Of | John Hancock vs. Washington Mutual Investors | John Hancock vs. Europacific Growth Fund |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |