Correlation Between Goldman Sachs and John Hancock

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

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

Diversification Opportunities for Goldman Sachs and John Hancock

0.9

Correlation Coefficient

Goldman Sachs  John Hancock

Almost no diversification

The 3 months correlation between Goldman and John is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Hedge and John Hancock Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Multifactor and Goldman Sachs 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 Goldman Sachs Hedge 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 Multifactor has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and John Hancock go up and down completely randomly.

Pair Corralation between Goldman Sachs and John Hancock

Given the investment horizon of 90 days Goldman Sachs Hedge is expected to under-perform the John Hancock. In addition to that, Goldman Sachs is 1.65 times more volatile than John Hancock Multifactor. It trades about -0.05 of its total potential returns per unit of risk. John Hancock Multifactor is currently generating about -0.05 per unit of volatility. If you would invest  7,018  in John Hancock Multifactor on December 20, 2024 and sell it today you would lose (204.00) from holding John Hancock Multifactor or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Goldman Sachs Hedge  vs.  John Hancock Multifactor

Goldman Sachs Hedge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Hedge has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

John Hancock Multifactor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Goldman Sachs and John Hancock

The main advantage of trading using opposite Goldman Sachs and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 Goldman Sachs Hedge and John Hancock Multifactor 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.