Correlation Between IShares Russell and John Hancock

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

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

Diversification Opportunities for IShares Russell and John Hancock

1.0

Correlation Coefficient

IShares Russell  John Hancock

No risk reduction

The 3 months correlation between IShares and John is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap 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 IShares Russell 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 iShares Russell Mid 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 Multifactor has no effect on the direction of IShares Russell i.e., IShares Russell and John Hancock go up and down completely randomly.

Pair Corralation between IShares Russell and John Hancock

Considering the 90-day investment horizon iShares Russell Mid Cap is expected to generate 1.04 times more return on investment than John Hancock. However, IShares Russell is 1.04 times more volatile than John Hancock Multifactor. It trades about -0.26 of its potential returns per unit of risk. John Hancock Multifactor is currently generating about -0.28 per unit of risk. If you would invest  9,420  in iShares Russell Mid Cap on September 23, 2024 and sell it today you would lose (498.00) from holding iShares Russell Mid Cap or give up 5.29% of portfolio value over 90 days.

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

iShares Russell Mid Cap  vs.  John Hancock Multifactor

iShares Russell Mid

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell Mid Cap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Russell is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

John Hancock Multifactor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Multifactor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Russell and John Hancock

The main advantage of trading using opposite IShares Russell and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 iShares Russell Mid Cap 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.