Correlation Between John Hancock and First Eagle

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

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

Diversification Opportunities for John Hancock and First Eagle

0.92

Correlation Coefficient

John Hancock  First Eagle

Almost no diversification

The 3 months correlation between John and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Bond and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global 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 Bond are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Global has no effect on the direction of John Hancock i.e., John Hancock and First Eagle go up and down completely randomly.

Pair Corralation between John Hancock and First Eagle

Assuming the 90 days horizon John Hancock is expected to generate 3.32 times less return on investment than First Eagle. But when comparing it to its historical volatility, John Hancock Bond is 1.25 times less risky than First Eagle. It trades about 0.12 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,296  in First Eagle Global on December 27, 2024 and sell it today you would earn a total of  103.00  from holding First Eagle Global or generate 7.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

John Hancock Bond  vs.  First Eagle Global

John Hancock Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Bond are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Global are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with John Hancock and First Eagle

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

The idea behind John Hancock Bond and First Eagle Global 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.