Correlation Between Multi Index and John Hancock

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

By analyzing existing cross correlation between Multi Index 2045 Lifetime and John Hancock Mid, you can compare the effects of market volatilities on Multi Index 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 Multi Index with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Index and John Hancock.

Diversification Opportunities for Multi Index and John Hancock

0.75

Correlation Coefficient

Multi Index  John Hancock

Poor diversification

The 3 months correlation between Multi and John is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2045 Lifetime 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 Multi Index 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 Multi Index 2045 Lifetime 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 Multi Index i.e., Multi Index and John Hancock go up and down completely randomly.

Pair Corralation between Multi Index and John Hancock

Assuming the 90 days horizon Multi Index 2045 Lifetime is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Multi Index 2045 Lifetime is 2.19 times less risky than John Hancock. The mutual fund trades about -0.09 of its potential returns per unit of risk. The John Hancock Mid is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,922  in John Hancock Mid on September 22, 2024 and sell it today you would lose (20.00) from holding John Hancock Mid or give up 1.04% of portfolio value over 90 days.

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

Multi Index 2045 Lifetime  vs.  John Hancock Mid

Multi Index 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Index 2045 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multi Index 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

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Mid are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, John Hancock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Index and John Hancock

The main advantage of trading using opposite Multi Index and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Index 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 Multi Index 2045 Lifetime 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.