Correlation Between John Hancock and SPDR SP

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

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

Diversification Opportunities for John Hancock and SPDR SP

0.99

Correlation Coefficient

John Hancock  SPDR SP

No risk reduction

The 3 months correlation between John and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and SPDR SP MIDCAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP MIDCAP 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 Multifactor are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP MIDCAP has no effect on the direction of John Hancock i.e., John Hancock and SPDR SP go up and down completely randomly.

Pair Corralation between John Hancock and SPDR SP

Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 0.87 times more return on investment than SPDR SP. However, John Hancock Multifactor is 1.15 times less risky than SPDR SP. It trades about 0.03 of its potential returns per unit of risk. SPDR SP MIDCAP is currently generating about 0.01 per unit of risk. If you would invest  5,985  in John Hancock Multifactor on September 22, 2024 and sell it today you would earn a total of  71.00  from holding John Hancock Multifactor or generate 1.19% return on investment over 90 days.

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

John Hancock Multifactor  vs.  SPDR SP MIDCAP

John Hancock Multifactor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Multifactor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, John Hancock is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SPDR SP MIDCAP

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP MIDCAP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPDR SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and SPDR SP

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

The idea behind John Hancock Multifactor and SPDR SP MIDCAP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.