Correlation Between John Hancock and Invesco Pennsylvania

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

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

Diversification Opportunities for John Hancock and Invesco Pennsylvania

0.4

Correlation Coefficient

John Hancock  Invesco Pennsylvania

Very weak diversification

The 3 months correlation between John and Invesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investors and Invesco Pennsylvania Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Pennsylvania 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 Investors are associated (or correlated) with Invesco Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Pennsylvania has no effect on the direction of John Hancock i.e., John Hancock and Invesco Pennsylvania go up and down completely randomly.

Pair Corralation between John Hancock and Invesco Pennsylvania

Considering the 90-day investment horizon John Hancock Investors is expected to generate 0.9 times more return on investment than Invesco Pennsylvania. However, John Hancock Investors is 1.11 times less risky than Invesco Pennsylvania. It trades about 0.26 of its potential returns per unit of risk. Invesco Pennsylvania Value is currently generating about 0.11 per unit of risk. If you would invest  1,334  in John Hancock Investors on August 31, 2024 and sell it today you would earn a total of  84.00  from holding John Hancock Investors or generate 6.3% return on investment over 90 days.

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

John Hancock Investors  vs.  Invesco Pennsylvania Value

John Hancock Investors

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Investors are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, John Hancock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Invesco Pennsylvania

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Pennsylvania Value are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco Pennsylvania is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with John Hancock and Invesco Pennsylvania

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

The idea behind John Hancock Investors and Invesco Pennsylvania Value 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.