Correlation Between Vanguard Value and John Hancock

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

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

Diversification Opportunities for Vanguard Value and John Hancock

0.72

Correlation Coefficient

Vanguard Value  John Hancock

Poor diversification

The 3 months correlation between Vanguard and John is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and John Hancock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Exchange and Vanguard Value 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 Vanguard Value Index 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 Exchange has no effect on the direction of Vanguard Value i.e., Vanguard Value and John Hancock go up and down completely randomly.

Pair Corralation between Vanguard Value and John Hancock

Considering the 90-day investment horizon Vanguard Value is expected to generate 1.09 times less return on investment than John Hancock. But when comparing it to its historical volatility, Vanguard Value Index is 1.04 times less risky than John Hancock. It trades about 0.13 of its potential returns per unit of risk. John Hancock Exchange is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,555  in John Hancock Exchange on August 30, 2024 and sell it today you would earn a total of  210.00  from holding John Hancock Exchange or generate 5.91% return on investment over 90 days.

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

Vanguard Value Index  vs.  John Hancock Exchange

Vanguard Value Index

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard Value 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 Exchange

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Exchange are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, John Hancock is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vanguard Value and John Hancock

The main advantage of trading using opposite Vanguard Value and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Vanguard Value Index and John Hancock Exchange 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.