Correlation Between Great Elm and John Hancock

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

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

Diversification Opportunities for Great Elm and John Hancock

0.36

Correlation Coefficient

Great Elm  John Hancock

Weak diversification

The 3 months correlation between Great and John is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group 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 Great Elm 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 Great Elm Group 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 Great Elm i.e., Great Elm and John Hancock go up and down completely randomly.

Pair Corralation between Great Elm and John Hancock

Assuming the 90 days horizon Great Elm Group is expected to under-perform the John Hancock. In addition to that, Great Elm is 1.99 times more volatile than John Hancock Income. It trades about 0.0 of its total potential returns per unit of risk. John Hancock Income is currently generating about 0.02 per unit of volatility. If you would invest  1,117  in John Hancock Income on December 19, 2024 and sell it today you would earn a total of  4.00  from holding John Hancock Income or generate 0.36% return on investment over 90 days.

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

Great Elm Group  vs.  John Hancock Income

Great Elm Group

Risk-Adjusted Performance

Weak

Over the last 90 days Great Elm Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

John Hancock Income

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Great Elm and John Hancock

The main advantage of trading using opposite Great Elm and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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 Great Elm Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.