Correlation Between John Hancock and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both John Hancock and Franklin Mutual 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 Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Funds and Franklin Mutual Global, you can compare the effects of market volatilities on John Hancock and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Franklin Mutual.
Diversification Opportunities for John Hancock and Franklin Mutual
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Funds and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Funds are associated (or correlated) with Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of John Hancock i.e., John Hancock and Franklin Mutual go up and down completely randomly.
Pair Corralation between John Hancock and Franklin Mutual
Assuming the 90 days horizon John Hancock Funds is expected to generate 0.52 times more return on investment than Franklin Mutual. However, John Hancock Funds is 1.94 times less risky than Franklin Mutual. It trades about 0.13 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.03 per unit of risk. If you would invest 1,096 in John Hancock Funds on September 5, 2024 and sell it today you would earn a total of 28.00 from holding John Hancock Funds or generate 2.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
John Hancock Funds vs. Franklin Mutual Global
Performance |
Timeline |
John Hancock Funds |
Franklin Mutual Global |
John Hancock and Franklin Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with John Hancock and Franklin Mutual
The main advantage of trading using opposite John Hancock and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Balanced | John Hancock vs. Multimanager Lifestyle Aggressive |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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