Correlation Between Diversified Bond and John Hancock

Can any of the company-specific risk be diversified away by investing in both Diversified Bond 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 Diversified Bond and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diversified Bond Fund and John Hancock Global, you can compare the effects of market volatilities on Diversified Bond 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 Diversified Bond with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Bond and John Hancock.

Diversification Opportunities for Diversified Bond and John Hancock

0.22

Correlation Coefficient

Diversified Bond  John Hancock

Modest diversification

The 3 months correlation between Diversified and John is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Bond Fund and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Diversified Bond 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 Diversified Bond Fund 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 Global has no effect on the direction of Diversified Bond i.e., Diversified Bond and John Hancock go up and down completely randomly.

Pair Corralation between Diversified Bond and John Hancock

Assuming the 90 days horizon Diversified Bond Fund is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Diversified Bond Fund is 1.59 times less risky than John Hancock. The mutual fund trades about -0.09 of its potential returns per unit of risk. The John Hancock Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,220  in John Hancock Global on September 6, 2024 and sell it today you would earn a total of  34.00  from holding John Hancock Global or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Diversified Bond Fund  vs.  John Hancock Global

Diversified Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diversified Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Diversified Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Global are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Diversified Bond and John Hancock

The main advantage of trading using opposite Diversified Bond and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Bond 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.

The idea behind Diversified Bond Fund and John Hancock Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.