Correlation Between Franklin Gold and John Hancock

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

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

Diversification Opportunities for Franklin Gold and John Hancock

-0.65

Correlation Coefficient

Franklin Gold  John Hancock

Excellent diversification

The 3 months correlation between Franklin and John is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Gold Precious and John Hancock Variable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Variable and Franklin Gold 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 Franklin Gold Precious 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 Variable has no effect on the direction of Franklin Gold i.e., Franklin Gold and John Hancock go up and down completely randomly.

Pair Corralation between Franklin Gold and John Hancock

Assuming the 90 days horizon Franklin Gold Precious is expected to under-perform the John Hancock. In addition to that, Franklin Gold is 1.87 times more volatile than John Hancock Variable. It trades about -0.29 of its total potential returns per unit of risk. John Hancock Variable is currently generating about 0.14 per unit of volatility. If you would invest  2,010  in John Hancock Variable on September 27, 2024 and sell it today you would earn a total of  88.00  from holding John Hancock Variable or generate 4.38% return on investment over 90 days.

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

Franklin Gold Precious  vs.  John Hancock Variable

Franklin Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Gold Precious 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

John Hancock Variable

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Variable are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin Gold and John Hancock

The main advantage of trading using opposite Franklin Gold and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Gold 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 Franklin Gold Precious and John Hancock Variable 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.