Correlation Between MicroSectors FANG and John Hancock

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

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

Diversification Opportunities for MicroSectors FANG and John Hancock

-0.51

Correlation Coefficient

MicroSectors FANG  John Hancock

Excellent diversification

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

Pair Corralation between MicroSectors FANG and John Hancock

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the John Hancock. In addition to that, MicroSectors FANG is 6.87 times more volatile than John Hancock Hedged. It trades about -0.17 of its total potential returns per unit of risk. John Hancock Hedged is currently generating about 0.13 per unit of volatility. If you would invest  1,062  in John Hancock Hedged on September 3, 2024 and sell it today you would earn a total of  49.00  from holding John Hancock Hedged or generate 4.61% return on investment over 90 days.

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

MicroSectors FANG Index  vs.  John Hancock Hedged

MicroSectors FANG Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

John Hancock Hedged

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Hedged are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MicroSectors FANG and John Hancock

The main advantage of trading using opposite MicroSectors FANG and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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 MicroSectors FANG Index and John Hancock Hedged 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.