Correlation Between Gmo Global and John Hancock

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

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

Diversification Opportunities for Gmo Global and John Hancock

0.48

Correlation Coefficient

Gmo Global  John Hancock

Very weak diversification

The 3 months correlation between Gmo and John is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and John Hancock Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Focused and Gmo Global 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 Gmo Global Equity 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 Focused has no effect on the direction of Gmo Global i.e., Gmo Global and John Hancock go up and down completely randomly.

Pair Corralation between Gmo Global and John Hancock

Assuming the 90 days horizon Gmo Global Equity is expected to under-perform the John Hancock. In addition to that, Gmo Global is 3.76 times more volatile than John Hancock Focused. It trades about -0.15 of its total potential returns per unit of risk. John Hancock Focused is currently generating about -0.18 per unit of volatility. If you would invest  307.00  in John Hancock Focused on September 24, 2024 and sell it today you would lose (2.00) from holding John Hancock Focused or give up 0.65% of portfolio value over 90 days.

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

Gmo Global Equity  vs.  John Hancock Focused

Gmo Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gmo Global and John Hancock

The main advantage of trading using opposite Gmo Global and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global 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 Gmo Global Equity and John Hancock Focused 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.