Correlation Between Disney and John Hancock

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

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

Diversification Opportunities for Disney and John Hancock

0.84

Correlation Coefficient

Disney  John Hancock

Very poor diversification

The 3 months correlation between Disney and John is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and John Hancock Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Trust and Disney 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 Walt Disney 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 Trust has no effect on the direction of Disney i.e., Disney and John Hancock go up and down completely randomly.

Pair Corralation between Disney and John Hancock

Considering the 90-day investment horizon Walt Disney is expected to generate 0.71 times more return on investment than John Hancock. However, Walt Disney is 1.41 times less risky than John Hancock. It trades about -0.02 of its potential returns per unit of risk. John Hancock Trust is currently generating about -0.1 per unit of risk. If you would invest  11,192  in Walt Disney on September 20, 2024 and sell it today you would lose (57.00) from holding Walt Disney or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  John Hancock Trust

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

John Hancock Trust

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days John Hancock Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Disney and John Hancock

The main advantage of trading using opposite Disney and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney and John Hancock Trust 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.