Correlation Between Sterling Capital and John Hancock

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

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

Diversification Opportunities for Sterling Capital and John Hancock

-0.01

Correlation Coefficient

Sterling Capital  John Hancock

Good diversification

The 3 months correlation between Sterling and John is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short 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 Sterling Capital 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 Sterling Capital Short 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 Sterling Capital i.e., Sterling Capital and John Hancock go up and down completely randomly.

Pair Corralation between Sterling Capital and John Hancock

Assuming the 90 days horizon Sterling Capital Short is expected to generate 0.11 times more return on investment than John Hancock. However, Sterling Capital Short is 8.97 times less risky than John Hancock. It trades about 0.2 of its potential returns per unit of risk. John Hancock Variable is currently generating about -0.01 per unit of risk. If you would invest  826.00  in Sterling Capital Short on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Sterling Capital Short or generate 1.45% return on investment over 90 days.

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

Sterling Capital Short  vs.  John Hancock Variable

Sterling Capital Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Variable

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Variable has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, 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 Sterling Capital and John Hancock

The main advantage of trading using opposite Sterling Capital and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital 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 Sterling Capital Short 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.