Correlation Between John Hancock and Dunham Small

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

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

Diversification Opportunities for John Hancock and Dunham Small

-0.59

Correlation Coefficient

John Hancock  Dunham Small

Excellent diversification

The 3 months correlation between John and Dunham is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Dunham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Small Cap 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 Government are associated (or correlated) with Dunham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Small Cap has no effect on the direction of John Hancock i.e., John Hancock and Dunham Small go up and down completely randomly.

Pair Corralation between John Hancock and Dunham Small

Assuming the 90 days horizon John Hancock Government is expected to under-perform the Dunham Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, John Hancock Government is 3.54 times less risky than Dunham Small. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Dunham Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,125  in Dunham Small Cap on September 13, 2024 and sell it today you would earn a total of  121.00  from holding Dunham Small Cap or generate 10.76% return on investment over 90 days.

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

John Hancock Government  vs.  Dunham Small Cap

John Hancock Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dunham Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dunham Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John Hancock and Dunham Small

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

The idea behind John Hancock Government and Dunham Small Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.