Correlation Between Guidemark Smallmid and John Hancock

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

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

Diversification Opportunities for Guidemark Smallmid and John Hancock

0.63

Correlation Coefficient

Guidemark Smallmid  John Hancock

Poor diversification

The 3 months correlation between Guidemark and John is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and John Hancock Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Funds and Guidemark Smallmid 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 Guidemark Smallmid Cap 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 Funds has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and John Hancock go up and down completely randomly.

Pair Corralation between Guidemark Smallmid and John Hancock

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to generate 3.56 times more return on investment than John Hancock. However, Guidemark Smallmid is 3.56 times more volatile than John Hancock Funds. It trades about 0.18 of its potential returns per unit of risk. John Hancock Funds is currently generating about 0.1 per unit of risk. If you would invest  2,003  in Guidemark Smallmid Cap on September 12, 2024 and sell it today you would earn a total of  263.00  from holding Guidemark Smallmid Cap or generate 13.13% return on investment over 90 days.

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

Guidemark Smallmid Cap  vs.  John Hancock Funds

Guidemark Smallmid Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid showed solid returns over the last few months and may actually be approaching a breakup point.

John Hancock Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Funds are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, 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 Guidemark Smallmid and John Hancock

The main advantage of trading using opposite Guidemark Smallmid and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Smallmid 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 Guidemark Smallmid Cap and John Hancock Funds 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.