Correlation Between John Hancock and High Income

Can any of the company-specific risk be diversified away by investing in both John Hancock and High Income 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 High Income 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 High Income Fund, you can compare the effects of market volatilities on John Hancock and High Income 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 High Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and High Income.

Diversification Opportunities for John Hancock and High Income

0.3

Correlation Coefficient

John Hancock  High Income

Weak diversification

The 3 months correlation between John and High is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and High Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income Fund 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 High Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of John Hancock i.e., John Hancock and High Income go up and down completely randomly.

Pair Corralation between John Hancock and High Income

Assuming the 90 days horizon John Hancock Variable is expected to under-perform the High Income. In addition to that, John Hancock is 4.66 times more volatile than High Income Fund. It trades about -0.02 of its total potential returns per unit of risk. High Income Fund is currently generating about 0.13 per unit of volatility. If you would invest  849.00  in High Income Fund on December 20, 2024 and sell it today you would earn a total of  15.00  from holding High Income Fund or generate 1.77% return on investment over 90 days.

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

John Hancock Variable  vs.  High Income Fund

John Hancock Variable

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Variable has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

High Income Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in High Income Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, High Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and High Income

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

The idea behind John Hancock Variable and High Income Fund 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.