Correlation Between John Hancock and L Abbett

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

By analyzing existing cross correlation between John Hancock Variable and L Abbett Growth, you can compare the effects of market volatilities on John Hancock and L Abbett 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and L Abbett.

Diversification Opportunities for John Hancock and L Abbett

0.96

Correlation Coefficient

John Hancock  L Abbett

Almost no diversification

The 3 months correlation between John and LGLSX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth 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 Variable are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of John Hancock i.e., John Hancock and L Abbett go up and down completely randomly.

Pair Corralation between John Hancock and L Abbett

Assuming the 90 days horizon John Hancock Variable is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, John Hancock Variable is 1.02 times less risky than L Abbett. The mutual fund trades about -0.01 of its potential returns per unit of risk. The L Abbett Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,862  in L Abbett Growth on October 23, 2024 and sell it today you would earn a total of  31.00  from holding L Abbett Growth or generate 0.64% return on investment over 90 days.

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

John Hancock Variable  vs.  L Abbett Growth

John Hancock Variable

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Variable are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

L Abbett Growth

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John Hancock and L Abbett

The main advantage of trading using opposite John Hancock and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett's long position.

The idea behind John Hancock Variable and L Abbett Growth 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.