Correlation Between Chevron Corp and John Hancock

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and John Hancock 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 Chevron Corp and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and John Hancock Multifactor, you can compare the effects of market volatilities on Chevron Corp and John Hancock 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 Chevron Corp with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and John Hancock.

Diversification Opportunities for Chevron Corp and John Hancock

0.83

Correlation Coefficient

Chevron Corp  John Hancock

Very poor diversification

The 3 months correlation between Chevron and John is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and John Hancock Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Multifactor and Chevron Corp 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 Chevron Corp are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Multifactor has no effect on the direction of Chevron Corp i.e., Chevron Corp and John Hancock go up and down completely randomly.

Pair Corralation between Chevron Corp and John Hancock

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.06 times more return on investment than John Hancock. However, Chevron Corp is 1.06 times more volatile than John Hancock Multifactor. It trades about 0.02 of its potential returns per unit of risk. John Hancock Multifactor is currently generating about -0.01 per unit of risk. If you would invest  15,025  in Chevron Corp on October 12, 2024 and sell it today you would earn a total of  205.00  from holding Chevron Corp or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Chevron Corp  vs.  John Hancock Multifactor

Chevron Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chevron Corp and John Hancock

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

The idea behind Chevron Corp and John Hancock Multifactor 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.