Correlation Between Global Gold and John Hancock

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

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

Diversification Opportunities for Global Gold and John Hancock

-0.63

Correlation Coefficient

Global Gold  John Hancock

Excellent diversification

The 3 months correlation between Global and John is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and John Hancock Variable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Variable and Global Gold 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 Global Gold Fund 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 Variable has no effect on the direction of Global Gold i.e., Global Gold and John Hancock go up and down completely randomly.

Pair Corralation between Global Gold and John Hancock

Assuming the 90 days horizon Global Gold Fund is expected to under-perform the John Hancock. In addition to that, Global Gold is 1.18 times more volatile than John Hancock Variable. It trades about -0.19 of its total potential returns per unit of risk. John Hancock Variable is currently generating about 0.13 per unit of volatility. If you would invest  1,997  in John Hancock Variable on September 24, 2024 and sell it today you would earn a total of  75.00  from holding John Hancock Variable or generate 3.76% return on investment over 90 days.

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

Global Gold Fund  vs.  John Hancock Variable

Global Gold Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

John Hancock Variable

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Variable are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Gold and John Hancock

The main advantage of trading using opposite Global Gold and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold 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 Global Gold Fund and John Hancock Variable 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.