Correlation Between Growth Equity and John Hancock

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

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

Diversification Opportunities for Growth Equity and John Hancock

0.96

Correlation Coefficient

Growth Equity  John Hancock

Almost no diversification

The 3 months correlation between Growth and John is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Growth Equity Investor and John Hancock Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Investment and Growth Equity 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 Growth Equity Investor 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 Investment has no effect on the direction of Growth Equity i.e., Growth Equity and John Hancock go up and down completely randomly.

Pair Corralation between Growth Equity and John Hancock

Assuming the 90 days horizon Growth Equity Investor is expected to generate 1.2 times more return on investment than John Hancock. However, Growth Equity is 1.2 times more volatile than John Hancock Investment. It trades about 0.09 of its potential returns per unit of risk. John Hancock Investment is currently generating about 0.09 per unit of risk. If you would invest  2,122  in Growth Equity Investor on August 31, 2024 and sell it today you would earn a total of  883.00  from holding Growth Equity Investor or generate 41.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.73%
Values	Daily Returns

Growth Equity Investor  vs.  John Hancock Investment

Growth Equity Investor

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Equity Investor are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Growth Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

John Hancock Investment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Investment are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Growth Equity and John Hancock

The main advantage of trading using opposite Growth Equity and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Equity 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 Growth Equity Investor and John Hancock Investment 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.