Correlation Between John Hancock and MFS Investment

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Can any of the company-specific risk be diversified away by investing in both John Hancock and MFS Investment 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 John Hancock and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Preferred and MFS Investment Grade, you can compare the effects of market volatilities on John Hancock and MFS Investment 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 John Hancock with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and MFS Investment.

Diversification Opportunities for John Hancock and MFS Investment

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between John and MFS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and John Hancock 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 John Hancock Preferred are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of John Hancock i.e., John Hancock and MFS Investment go up and down completely randomly.

Pair Corralation between John Hancock and MFS Investment

Considering the 90-day investment horizon John Hancock Preferred is expected to under-perform the MFS Investment. But the etf apears to be less risky and, when comparing its historical volatility, John Hancock Preferred is 1.05 times less risky than MFS Investment. The etf trades about -0.3 of its potential returns per unit of risk. The MFS Investment Grade is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  827.00  in MFS Investment Grade on October 9, 2024 and sell it today you would lose (25.00) from holding MFS Investment Grade or give up 3.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

John Hancock Preferred  vs.  MFS Investment Grade

 Performance 
       Timeline  
John Hancock Preferred 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days John Hancock Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.
MFS Investment Grade 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

John Hancock and MFS Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with John Hancock and MFS Investment

The main advantage of trading using opposite John Hancock and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, MFS Investment 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 MFS Investment will offset losses from the drop in MFS Investment's long position.
The idea behind John Hancock Preferred and MFS Investment Grade 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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