Correlation Between John Hancock and Diversified Income
Can any of the company-specific risk be diversified away by investing in both John Hancock and Diversified Income 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 Diversified Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Global and Diversified Income Fund, you can compare the effects of market volatilities on John Hancock and Diversified Income 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 Diversified Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Diversified Income.
Diversification Opportunities for John Hancock and Diversified Income
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Diversified is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Global and Diversified Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified 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 Global are associated (or correlated) with Diversified Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Income has no effect on the direction of John Hancock i.e., John Hancock and Diversified Income go up and down completely randomly.
Pair Corralation between John Hancock and Diversified Income
Assuming the 90 days horizon John Hancock Global is expected to generate 2.58 times more return on investment than Diversified Income. However, John Hancock is 2.58 times more volatile than Diversified Income Fund. It trades about 0.05 of its potential returns per unit of risk. Diversified Income Fund is currently generating about 0.08 per unit of risk. If you would invest 1,234 in John Hancock Global on September 5, 2024 and sell it today you would earn a total of 21.00 from holding John Hancock Global or generate 1.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
John Hancock Global vs. Diversified Income Fund
Performance |
Timeline |
John Hancock Global |
Diversified Income |
John Hancock and Diversified Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with John Hancock and Diversified Income
The main advantage of trading using opposite John Hancock and Diversified Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Diversified Income 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 Diversified Income will offset losses from the drop in Diversified Income's long position.John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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