Correlation Between John Hancock and Franklin Templeton

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

By analyzing existing cross correlation between John Hancock Investors and Franklin Templeton Limited, you can compare the effects of market volatilities on John Hancock and Franklin Templeton 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 Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin Templeton.

Diversification Opportunities for John Hancock and Franklin Templeton

0.36

Correlation Coefficient

John Hancock  Franklin Templeton

Weak diversification

The 3 months correlation between John and Franklin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investors and Franklin Templeton Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton 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 Investors are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton has no effect on the direction of John Hancock i.e., John Hancock and Franklin Templeton go up and down completely randomly.

Pair Corralation between John Hancock and Franklin Templeton

Considering the 90-day investment horizon John Hancock is expected to generate 3.29 times less return on investment than Franklin Templeton. But when comparing it to its historical volatility, John Hancock Investors is 1.18 times less risky than Franklin Templeton. It trades about 0.14 of its potential returns per unit of risk. Franklin Templeton Limited is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Franklin Templeton Limited on September 15, 2024 and sell it today you would earn a total of  24.00  from holding Franklin Templeton Limited or generate 3.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

John Hancock Investors  vs.  Franklin Templeton Limited

John Hancock Investors

Risk-Adjusted Performance

12 of 100

Good

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.

Franklin Templeton

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Franklin Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with John Hancock and Franklin Templeton

The main advantage of trading using opposite John Hancock and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin Templeton 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 Franklin Templeton will offset losses from the drop in Franklin Templeton's long position.

The idea behind John Hancock Investors and Franklin Templeton Limited 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.