Correlation Between Gmo Resources and John Hancock

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

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

Diversification Opportunities for Gmo Resources and John Hancock

-0.28

Correlation Coefficient

Gmo Resources  John Hancock

Very good diversification

The 3 months correlation between Gmo and John is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources and John Hancock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Mid and Gmo Resources 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 Gmo Resources 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 Mid has no effect on the direction of Gmo Resources i.e., Gmo Resources and John Hancock go up and down completely randomly.

Pair Corralation between Gmo Resources and John Hancock

Assuming the 90 days horizon Gmo Resources is expected to generate 2.24 times less return on investment than John Hancock. But when comparing it to its historical volatility, Gmo Resources is 1.14 times less risky than John Hancock. It trades about 0.11 of its potential returns per unit of risk. John Hancock Mid is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,831  in John Hancock Mid on September 13, 2024 and sell it today you would earn a total of  102.00  from holding John Hancock Mid or generate 5.57% return on investment over 90 days.

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

Gmo Resources  vs.  John Hancock Mid

Gmo Resources

Risk-Adjusted Performance

0 of 100

Weak

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

John Hancock Mid

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Mid are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, John Hancock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gmo Resources and John Hancock

The main advantage of trading using opposite Gmo Resources and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources 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 Gmo Resources and John Hancock Mid 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.