Correlation Between Baillie Gifford and John Hancock

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

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

Diversification Opportunities for Baillie Gifford and John Hancock

-0.36

Correlation Coefficient

Baillie Gifford  John Hancock

Very good diversification

The 3 months correlation between Baillie and John is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Emerging and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Baillie Gifford 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 Baillie Gifford Emerging 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 Financial has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and John Hancock go up and down completely randomly.

Pair Corralation between Baillie Gifford and John Hancock

Assuming the 90 days horizon Baillie Gifford Emerging is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baillie Gifford Emerging is 2.11 times less risky than John Hancock. The mutual fund trades about -0.09 of its potential returns per unit of risk. The John Hancock Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,316  in John Hancock Financial on October 24, 2024 and sell it today you would earn a total of  396.00  from holding John Hancock Financial or generate 11.94% return on investment over 90 days.

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

Baillie Gifford Emerging  vs.  John Hancock Financial

Baillie Gifford Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baillie Gifford and John Hancock

The main advantage of trading using opposite Baillie Gifford and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford 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 Baillie Gifford Emerging and John Hancock Financial 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.