Correlation Between John Hancock and Madison Core

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

Diversification Opportunities for John Hancock and Madison Core

-0.24

Correlation Coefficient

John Hancock  Madison Core

Very good diversification

The 3 months correlation between John and Madison is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of John Hancock i.e., John Hancock and Madison Core go up and down completely randomly.

Pair Corralation between John Hancock and Madison Core

Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Madison Core. In addition to that, John Hancock is 4.94 times more volatile than Madison E Bond. It trades about -0.02 of its total potential returns per unit of risk. Madison E Bond is currently generating about 0.14 per unit of volatility. If you would invest  880.00  in Madison E Bond on December 19, 2024 and sell it today you would earn a total of  20.00  from holding Madison E Bond or generate 2.27% return on investment over 90 days.

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

John Hancock Financial  vs.  Madison E Bond

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 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.

Madison E Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Madison E Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Madison Core 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 Madison Core

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

The idea behind John Hancock Financial and Madison E Bond 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.