Correlation Between Walmart and John Hancock

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

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

Diversification Opportunities for Walmart and John Hancock

0.84

Correlation Coefficient

Walmart  John Hancock

Very poor diversification

The 3 months correlation between Walmart and John is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and John Hancock go up and down completely randomly.

Pair Corralation between Walmart and John Hancock

Considering the 90-day investment horizon Walmart is expected to generate 0.74 times more return on investment than John Hancock. However, Walmart is 1.35 times less risky than John Hancock. It trades about 0.5 of its potential returns per unit of risk. John Hancock Trust is currently generating about -0.1 per unit of risk. If you would invest  8,641  in Walmart on September 20, 2024 and sell it today you would earn a total of  901.00  from holding Walmart or generate 10.43% return on investment over 90 days.

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

Walmart  vs.  John Hancock Trust

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

John Hancock Trust

Risk-Adjusted Performance

0 of 100

Insignificant

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 Walmart and John Hancock

The main advantage of trading using opposite Walmart and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.