Correlation Between John Hancock and Franklin Utilities

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

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

Diversification Opportunities for John Hancock and Franklin Utilities

0.71

Correlation Coefficient

John Hancock  Franklin Utilities

Poor diversification

The 3 months correlation between John and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Ii and Franklin Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities 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 Ii are associated (or correlated) with Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of John Hancock i.e., John Hancock and Franklin Utilities go up and down completely randomly.

Pair Corralation between John Hancock and Franklin Utilities

Assuming the 90 days horizon John Hancock Ii is expected to generate 1.2 times more return on investment than Franklin Utilities. However, John Hancock is 1.2 times more volatile than Franklin Utilities. It trades about 0.03 of its potential returns per unit of risk. Franklin Utilities is currently generating about 0.04 per unit of risk. If you would invest  1,665  in John Hancock Ii on September 14, 2024 and sell it today you would earn a total of  269.00  from holding John Hancock Ii or generate 16.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

John Hancock Ii  vs.  Franklin Utilities

John Hancock Ii

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Ii are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Utilities

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with John Hancock and Franklin Utilities

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

The idea behind John Hancock Ii and Franklin Utilities 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.