Correlation Between John Hancock and T Rowe

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

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

Diversification Opportunities for John Hancock and T Rowe

0.72

Correlation Coefficient

John Hancock  T Rowe

Poor diversification

The 3 months correlation between John and PATFX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investment and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 Investment are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of John Hancock i.e., John Hancock and T Rowe go up and down completely randomly.

Pair Corralation between John Hancock and T Rowe

Assuming the 90 days horizon John Hancock Investment is expected to under-perform the T Rowe. In addition to that, John Hancock is 1.21 times more volatile than T Rowe Price. It trades about -0.14 of its total potential returns per unit of risk. T Rowe Price is currently generating about -0.04 per unit of volatility. If you would invest  1,137  in T Rowe Price on September 15, 2024 and sell it today you would lose (8.00) from holding T Rowe Price or give up 0.7% of portfolio value over 90 days.

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

John Hancock Investment  vs.  T Rowe Price

John Hancock Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Investment has generated negative risk-adjusted returns adding no value to fund investors. 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.

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, T Rowe 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 T Rowe

The main advantage of trading using opposite John Hancock and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind John Hancock Investment and T Rowe Price 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.