Correlation Between John Hancock and Goldman Sachs

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

Diversification Opportunities for John Hancock and Goldman Sachs

-0.17

Correlation Coefficient

John Hancock  Goldman Sachs

Good diversification

The 3 months correlation between John and Goldman is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Intern has no effect on the direction of John Hancock i.e., John Hancock and Goldman Sachs go up and down completely randomly.

Pair Corralation between John Hancock and Goldman Sachs

Assuming the 90 days horizon John Hancock is expected to generate 3.83 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, John Hancock Government is 3.18 times less risky than Goldman Sachs. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,332  in Goldman Sachs International on December 28, 2024 and sell it today you would earn a total of  142.00  from holding Goldman Sachs International or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

John Hancock Government  vs.  Goldman Sachs International

John Hancock Government

Risk-Adjusted Performance

Good

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.

Goldman Sachs Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with John Hancock and Goldman Sachs

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

The idea behind John Hancock Government and Goldman Sachs International 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.