Correlation Between John Hancock and Schwab Health

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

Diversification Opportunities for John Hancock and Schwab Health

0.75

Correlation Coefficient

John Hancock  Schwab Health

Poor diversification

The 3 months correlation between John and Schwab is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Schwab Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Health Care 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 Schwab Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Health Care has no effect on the direction of John Hancock i.e., John Hancock and Schwab Health go up and down completely randomly.

Pair Corralation between John Hancock and Schwab Health

Assuming the 90 days horizon John Hancock Government is expected to generate 0.32 times more return on investment than Schwab Health. However, John Hancock Government is 3.15 times less risky than Schwab Health. It trades about 0.0 of its potential returns per unit of risk. Schwab Health Care is currently generating about -0.12 per unit of risk. If you would invest  770.00  in John Hancock Government on October 4, 2024 and sell it today you would earn a total of  0.00  from holding John Hancock Government or generate 0.0% return on investment over 90 days.

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

John Hancock Government  vs.  Schwab Health Care

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.

Schwab Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with John Hancock and Schwab Health

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

The idea behind John Hancock Government and Schwab Health Care 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.