Correlation Between John Hancock and Principal Global

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

Diversification Opportunities for John Hancock and Principal Global

-0.08

Correlation Coefficient

John Hancock  Principal Global

Good diversification

The 3 months correlation between John and Principal is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Principal Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Global Sus 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 Principal Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Global Sus has no effect on the direction of John Hancock i.e., John Hancock and Principal Global go up and down completely randomly.

Pair Corralation between John Hancock and Principal Global

Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.49 times more return on investment than Principal Global. However, John Hancock is 1.49 times more volatile than Principal Global Sustainable. It trades about -0.25 of its potential returns per unit of risk. Principal Global Sustainable is currently generating about -0.45 per unit of risk. If you would invest  3,790  in John Hancock Financial on October 12, 2024 and sell it today you would lose (297.00) from holding John Hancock Financial or give up 7.84% of portfolio value over 90 days.

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

John Hancock Financial  vs.  Principal Global Sustainable

John Hancock Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 5 (%) 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.

Principal Global Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Principal Global Sustainable has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with John Hancock and Principal Global

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

The idea behind John Hancock Financial and Principal Global Sustainable 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.