Correlation Between John Hancock and Aqr Large

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

Diversification Opportunities for John Hancock and Aqr Large

0.56

Correlation Coefficient

John Hancock  Aqr Large

Very weak diversification

The 3 months correlation between John and Aqr is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap 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 Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of John Hancock i.e., John Hancock and Aqr Large go up and down completely randomly.

Pair Corralation between John Hancock and Aqr Large

Considering the 90-day investment horizon John Hancock Financial is expected to generate 0.91 times more return on investment than Aqr Large. However, John Hancock Financial is 1.09 times less risky than Aqr Large. It trades about 0.09 of its potential returns per unit of risk. Aqr Large Cap is currently generating about -0.07 per unit of risk. If you would invest  3,260  in John Hancock Financial on September 30, 2024 and sell it today you would earn a total of  297.00  from holding John Hancock Financial or generate 9.11% return on investment over 90 days.

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

John Hancock Financial  vs.  Aqr Large Cap

John Hancock Financial

Risk-Adjusted Performance

7 of 100

OK

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 January 2025.

Aqr Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Aqr Large

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

The idea behind John Hancock Financial and Aqr Large Cap 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.