Correlation Between John Hancock and Mondrian Global

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

Diversification Opportunities for John Hancock and Mondrian Global

-0.05

Correlation Coefficient

John Hancock  Mondrian Global

Good diversification

The 3 months correlation between John and Mondrian is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Mondrian Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian Global Equity 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 Mondrian Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian Global Equity has no effect on the direction of John Hancock i.e., John Hancock and Mondrian Global go up and down completely randomly.

Pair Corralation between John Hancock and Mondrian Global

Considering the 90-day investment horizon John Hancock Financial is expected to under-perform the Mondrian Global. In addition to that, John Hancock is 1.92 times more volatile than Mondrian Global Equity. It trades about -0.02 of its total potential returns per unit of risk. Mondrian Global Equity is currently generating about 0.13 per unit of volatility. If you would invest  1,376  in Mondrian Global Equity on December 27, 2024 and sell it today you would earn a total of  78.00  from holding Mondrian Global Equity or generate 5.67% 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.  Mondrian Global Equity

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.

Mondrian Global Equity

Risk-Adjusted Performance

OK

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

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

The idea behind John Hancock Financial and Mondrian Global Equity 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.