Correlation Between John Hancock and Destinations Low

Can any of the company-specific risk be diversified away by investing in both John Hancock and Destinations Low 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 Destinations Low 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 Destinations Low Duration, you can compare the effects of market volatilities on John Hancock and Destinations Low 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 Destinations Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Destinations Low.

Diversification Opportunities for John Hancock and Destinations Low

-0.46

Correlation Coefficient

John Hancock  Destinations Low

Very good diversification

The 3 months correlation between John and Destinations is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Destinations Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Low Duration 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 Destinations Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Low Duration has no effect on the direction of John Hancock i.e., John Hancock and Destinations Low go up and down completely randomly.

Pair Corralation between John Hancock and Destinations Low

Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Destinations Low. In addition to that, John Hancock is 6.58 times more volatile than Destinations Low Duration. It trades about -0.28 of its total potential returns per unit of risk. Destinations Low Duration is currently generating about -0.13 per unit of volatility. If you would invest  957.00  in Destinations Low Duration on October 10, 2024 and sell it today you would lose (6.00) from holding Destinations Low Duration or give up 0.63% of portfolio value over 90 days.

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

John Hancock Financial  vs.  Destinations Low Duration

John Hancock Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Destinations Low Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Low Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Low 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 Destinations Low

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

The idea behind John Hancock Financial and Destinations Low Duration 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.