Correlation Between John Hancock and Pace Smallmedium

Can any of the company-specific risk be diversified away by investing in both John Hancock and Pace Smallmedium 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 Pace Smallmedium 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 Pace Smallmedium Value, you can compare the effects of market volatilities on John Hancock and Pace Smallmedium 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 Pace Smallmedium. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Pace Smallmedium.

Diversification Opportunities for John Hancock and Pace Smallmedium

0.86

Correlation Coefficient

John Hancock  Pace Smallmedium

Very poor diversification

The 3 months correlation between John and Pace is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Ii and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value 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 Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of John Hancock i.e., John Hancock and Pace Smallmedium go up and down completely randomly.

Pair Corralation between John Hancock and Pace Smallmedium

Assuming the 90 days horizon John Hancock Ii is expected to under-perform the Pace Smallmedium. In addition to that, John Hancock is 1.05 times more volatile than Pace Smallmedium Value. It trades about -0.01 of its total potential returns per unit of risk. Pace Smallmedium Value is currently generating about 0.03 per unit of volatility. If you would invest  2,141  in Pace Smallmedium Value on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Pace Smallmedium Value or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

John Hancock Ii  vs.  Pace Smallmedium Value

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.

Pace Smallmedium Value

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John Hancock and Pace Smallmedium

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

The idea behind John Hancock Ii and Pace Smallmedium Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.