Correlation Between Travelers Companies and John Hancock

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

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

Diversification Opportunities for Travelers Companies and John Hancock

0.67

Correlation Coefficient

Travelers Companies  John Hancock

Poor diversification

The 3 months correlation between Travelers and John is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and John Hancock Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Trust and Travelers Companies 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 The Travelers Companies 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 Trust has no effect on the direction of Travelers Companies i.e., Travelers Companies and John Hancock go up and down completely randomly.

Pair Corralation between Travelers Companies and John Hancock

Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.17 times more return on investment than John Hancock. However, Travelers Companies is 1.17 times more volatile than John Hancock Trust. It trades about 0.05 of its potential returns per unit of risk. John Hancock Trust is currently generating about 0.05 per unit of risk. If you would invest  17,966  in The Travelers Companies on September 24, 2024 and sell it today you would earn a total of  6,110  from holding The Travelers Companies or generate 34.01% return on investment over 90 days.

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

The Travelers Companies  vs.  John Hancock Trust

The Travelers Companies

Risk-Adjusted Performance

1 of 100

Weak

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

John Hancock Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Trust 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.

Pair Trading with Travelers Companies and John Hancock

The main advantage of trading using opposite Travelers Companies and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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 The Travelers Companies and John Hancock Trust 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.