Correlation Between John Hancock and Lord Abbett

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

Diversification Opportunities for John Hancock and Lord Abbett

0.14

Correlation Coefficient

John Hancock  Lord Abbett

Average diversification

The 3 months correlation between John and Lord is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Lord Abbett Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Mid 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Mid has no effect on the direction of John Hancock i.e., John Hancock and Lord Abbett go up and down completely randomly.

Pair Corralation between John Hancock and Lord Abbett

Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Lord Abbett. In addition to that, John Hancock is 1.61 times more volatile than Lord Abbett Mid. It trades about -0.09 of its total potential returns per unit of risk. Lord Abbett Mid is currently generating about -0.11 per unit of volatility. If you would invest  3,463  in Lord Abbett Mid on December 17, 2024 and sell it today you would lose (213.00) from holding Lord Abbett Mid or give up 6.15% of portfolio value over 90 days.

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

John Hancock Financial  vs.  Lord Abbett Mid

John Hancock Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest conflicting performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Lord Abbett Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with John Hancock and Lord Abbett

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

The idea behind John Hancock Financial and Lord Abbett Mid 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.