Correlation Between John Hancock and Equity Growth

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

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

Diversification Opportunities for John Hancock and Equity Growth

0.81

Correlation Coefficient

John Hancock  Equity Growth

Very poor diversification

The 3 months correlation between John and Equity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and John Hancock 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 John Hancock Financial are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of John Hancock i.e., John Hancock and Equity Growth go up and down completely randomly.

Pair Corralation between John Hancock and Equity Growth

Considering the 90-day investment horizon John Hancock is expected to generate 40.68 times less return on investment than Equity Growth. But when comparing it to its historical volatility, John Hancock Financial is 23.36 times less risky than Equity Growth. It trades about 0.02 of its potential returns per unit of risk. Equity Growth Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,259  in Equity Growth Fund on October 15, 2024 and sell it today you would earn a total of  1,130  from holding Equity Growth Fund or generate 50.02% return on investment over 90 days.

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

John Hancock Financial  vs.  Equity Growth Fund

John Hancock Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Equity Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Growth Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Equity Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Equity Growth

The main advantage of trading using opposite John Hancock and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.

The idea behind John Hancock Financial and Equity Growth Fund 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.