Correlation Between American Century and John Hancock

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

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

Diversification Opportunities for American Century and John Hancock

0.92

Correlation Coefficient

American Century  John Hancock

Almost no diversification

The 3 months correlation between American and John is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and John Hancock Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Preferred and American Century 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 American Century ETF 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 Preferred has no effect on the direction of American Century i.e., American Century and John Hancock go up and down completely randomly.

Pair Corralation between American Century and John Hancock

Given the investment horizon of 90 days American Century ETF is expected to generate 1.32 times more return on investment than John Hancock. However, American Century is 1.32 times more volatile than John Hancock Preferred. It trades about 0.11 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.13 per unit of risk. If you would invest  3,664  in American Century ETF on August 30, 2024 and sell it today you would earn a total of  94.00  from holding American Century ETF or generate 2.57% return on investment over 90 days.

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

American Century ETF  vs.  John Hancock Preferred

American Century ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, American Century is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

John Hancock Preferred

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with American Century and John Hancock

The main advantage of trading using opposite American Century and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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 American Century ETF and John Hancock Preferred 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.