Correlation Between John Hancock and Guidemark Smallmid

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

Diversification Opportunities for John Hancock and Guidemark Smallmid

0.94

Correlation Coefficient

John Hancock  Guidemark Smallmid

Almost no diversification

The 3 months correlation between John and Guidemark is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap 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 Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of John Hancock i.e., John Hancock and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between John Hancock and Guidemark Smallmid

Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.4 times more return on investment than Guidemark Smallmid. However, John Hancock is 1.4 times more volatile than Guidemark Smallmid Cap. It trades about 0.09 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.07 per unit of risk. If you would invest  2,365  in John Hancock Financial on September 26, 2024 and sell it today you would earn a total of  1,165  from holding John Hancock Financial or generate 49.26% return on investment over 90 days.

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

John Hancock Financial  vs.  Guidemark Smallmid Cap

John Hancock Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 8 (%) 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 January 2025.

Guidemark Smallmid Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Guidemark Smallmid 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 Guidemark Smallmid

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

The idea behind John Hancock Financial and Guidemark Smallmid Cap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.