Correlation Between John Hancock and MFS High

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

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

Diversification Opportunities for John Hancock and MFS High

-0.55

Correlation Coefficient

John Hancock  MFS High

Excellent diversification

The 3 months correlation between John and MFS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Income and John Hancock 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 John Hancock Financial are associated (or correlated) with MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of John Hancock i.e., John Hancock and MFS High go up and down completely randomly.

Pair Corralation between John Hancock and MFS High

Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.13 times more return on investment than MFS High. However, John Hancock is 2.13 times more volatile than MFS High Income. It trades about 0.16 of its potential returns per unit of risk. MFS High Income is currently generating about -0.06 per unit of risk. If you would invest  3,189  in John Hancock Financial on September 17, 2024 and sell it today you would earn a total of  501.00  from holding John Hancock Financial or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

John Hancock Financial  vs.  MFS High Income

John Hancock Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

MFS High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS High Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with John Hancock and MFS High

The main advantage of trading using opposite John Hancock and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, MFS High 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 MFS High will offset losses from the drop in MFS High's long position.

The idea behind John Hancock Financial and MFS High Income 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..