Correlation Between European Equity and John Hancock

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

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

Diversification Opportunities for European Equity and John Hancock

0.51

Correlation Coefficient

European Equity  John Hancock

Very weak diversification

The 3 months correlation between European and John is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and European Equity 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 European Equity Closed 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 Income has no effect on the direction of European Equity i.e., European Equity and John Hancock go up and down completely randomly.

Pair Corralation between European Equity and John Hancock

Considering the 90-day investment horizon European Equity Closed is expected to generate 1.99 times more return on investment than John Hancock. However, European Equity is 1.99 times more volatile than John Hancock Income. It trades about -0.05 of its potential returns per unit of risk. John Hancock Income is currently generating about -0.13 per unit of risk. If you would invest  848.00  in European Equity Closed on September 25, 2024 and sell it today you would lose (7.00) from holding European Equity Closed or give up 0.83% of portfolio value over 90 days.

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

European Equity Closed  vs.  John Hancock Income

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

John Hancock Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, John Hancock is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with European Equity and John Hancock

The main advantage of trading using opposite European Equity and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity 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 European Equity Closed and John Hancock Income 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.