Correlation Between John Hancock and Nationwide Geneva

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

Diversification Opportunities for John Hancock and Nationwide Geneva

0.69

Correlation Coefficient

John Hancock  Nationwide Geneva

Poor diversification

The 3 months correlation between John and Nationwide is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Nationwide Geneva Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Geneva Small 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 Nationwide Geneva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Geneva Small has no effect on the direction of John Hancock i.e., John Hancock and Nationwide Geneva go up and down completely randomly.

Pair Corralation between John Hancock and Nationwide Geneva

Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.26 times more return on investment than Nationwide Geneva. However, John Hancock is 1.26 times more volatile than Nationwide Geneva Small. It trades about -0.03 of its potential returns per unit of risk. Nationwide Geneva Small is currently generating about -0.15 per unit of risk. If you would invest  3,433  in John Hancock Financial on December 21, 2024 and sell it today you would lose (112.00) from holding John Hancock Financial or give up 3.26% of portfolio value over 90 days.

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

John Hancock Financial  vs.  Nationwide Geneva Small

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.

Nationwide Geneva Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Geneva Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Nationwide Geneva

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

The idea behind John Hancock Financial and Nationwide Geneva Small 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.