Correlation Between Walmart and John Hancock
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and John Hancock Tax, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and John Hancock.
Diversification Opportunities for Walmart and John Hancock
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and John is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and John Hancock Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Tax and Walmart 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 Walmart 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 Tax has no effect on the direction of Walmart i.e., Walmart and John Hancock go up and down completely randomly.
Pair Corralation between Walmart and John Hancock
Considering the 90-day investment horizon Walmart is expected to generate 1.1 times more return on investment than John Hancock. However, Walmart is 1.1 times more volatile than John Hancock Tax. It trades about 0.16 of its potential returns per unit of risk. John Hancock Tax is currently generating about 0.08 per unit of risk. If you would invest 4,987 in Walmart on August 31, 2024 and sell it today you would earn a total of 4,263 from holding Walmart or generate 85.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. John Hancock Tax
Performance |
| Timeline |
| Walmart |
| John Hancock Tax |
Walmart and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and John Hancock
The main advantage of trading using opposite Walmart and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Preferred | John Hancock vs. Pimco Corporate Income |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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