Correlation Between Applied Finance and John Hancock
Can any of the company-specific risk be diversified away by investing in both Applied Finance 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 Applied Finance and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and John Hancock Ii, you can compare the effects of market volatilities on Applied Finance 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 Applied Finance with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and John Hancock.
Diversification Opportunities for Applied Finance and John Hancock
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and John is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and John Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Ii and Applied Finance 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 Applied Finance Explorer 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 Ii has no effect on the direction of Applied Finance i.e., Applied Finance and John Hancock go up and down completely randomly.
Pair Corralation between Applied Finance and John Hancock
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.02 times more return on investment than John Hancock. However, Applied Finance is 1.02 times more volatile than John Hancock Ii. It trades about -0.04 of its potential returns per unit of risk. John Hancock Ii is currently generating about -0.07 per unit of risk. If you would invest 2,166 in Applied Finance Explorer on December 28, 2024 and sell it today you would lose (58.00) from holding Applied Finance Explorer or give up 2.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Applied Finance Explorer vs. John Hancock Ii
Performance |
Timeline |
Applied Finance Explorer |
John Hancock Ii |
Applied Finance and John Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Applied Finance and John Hancock
The main advantage of trading using opposite Applied Finance and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance 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.Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
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Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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