Correlation Between Great Elm and John Hancock

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

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

Diversification Opportunities for Great Elm and John Hancock

0.51

Correlation Coefficient

Great Elm  John Hancock

Very weak diversification

The 3 months correlation between Great and John is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and John Hancock Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Investors and Great Elm 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 Great Elm Capital 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 Investors has no effect on the direction of Great Elm i.e., Great Elm and John Hancock go up and down completely randomly.

Pair Corralation between Great Elm and John Hancock

Given the investment horizon of 90 days Great Elm Capital is expected to generate 2.76 times more return on investment than John Hancock. However, Great Elm is 2.76 times more volatile than John Hancock Investors. It trades about 0.06 of its potential returns per unit of risk. John Hancock Investors is currently generating about 0.16 per unit of risk. If you would invest  1,009  in Great Elm Capital on September 14, 2024 and sell it today you would earn a total of  36.00  from holding Great Elm Capital or generate 3.57% return on investment over 90 days.

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

Great Elm Capital  vs.  John Hancock Investors

Great Elm Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

John Hancock Investors

Risk-Adjusted Performance

12 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Investors are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, John Hancock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Great Elm and John Hancock

The main advantage of trading using opposite Great Elm and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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 Great Elm Capital and John Hancock Investors 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.