Correlation Between Home Depot and John Hancock
Can any of the company-specific risk be diversified away by investing in both Home Depot 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 Home Depot and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and John Hancock Multifactor, you can compare the effects of market volatilities on Home Depot 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 Home Depot with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and John Hancock.
Diversification Opportunities for Home Depot and John Hancock
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and John is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot 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 Home Depot 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 Home Depot 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 Home Depot i.e., Home Depot and John Hancock go up and down completely randomly.
Pair Corralation between Home Depot and John Hancock
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the John Hancock. In addition to that, Home Depot is 1.3 times more volatile than John Hancock Multifactor. It trades about -0.16 of its total potential returns per unit of risk. John Hancock Multifactor is currently generating about -0.16 per unit of volatility. If you would invest 4,182 in John Hancock Multifactor on December 16, 2024 and sell it today you would lose (464.00) from holding John Hancock Multifactor or give up 11.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Home Depot vs. John Hancock Multifactor
Performance |
Timeline |
Home Depot |
John Hancock Multifactor |
Home Depot and John Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and John Hancock
The main advantage of trading using opposite Home Depot and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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.Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
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Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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