Correlation Between John Hancock and Putnam Growth

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

Diversification Opportunities for John Hancock and Putnam Growth

0.72

Correlation Coefficient

John Hancock  Putnam Growth

Poor diversification

The 3 months correlation between John and Putnam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport 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 Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of John Hancock i.e., John Hancock and Putnam Growth go up and down completely randomly.

Pair Corralation between John Hancock and Putnam Growth

Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.35 times more return on investment than Putnam Growth. However, John Hancock is 1.35 times more volatile than Putnam Growth Opportunities. It trades about 0.16 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about -0.04 per unit of risk. If you would invest  3,502  in John Hancock Financial on October 23, 2024 and sell it today you would earn a total of  166.00  from holding John Hancock Financial or generate 4.74% return on investment over 90 days.

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

John Hancock Financial  vs.  Putnam Growth Opportunities

John Hancock Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 7 (%) 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 February 2025.

Putnam Growth Opport

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Growth Opportunities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Putnam Growth 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 Putnam Growth

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

The idea behind John Hancock Financial and Putnam Growth Opportunities 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.