Correlation Between John Hancock and Timothy Plan

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

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

Diversification Opportunities for John Hancock and Timothy Plan

0.96

Correlation Coefficient

John Hancock  Timothy Plan

Almost no diversification

The 3 months correlation between John and Timothy is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Timothy Plan LargeMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan LargeMid 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 Multifactor are associated (or correlated) with Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan LargeMid has no effect on the direction of John Hancock i.e., John Hancock and Timothy Plan go up and down completely randomly.

Pair Corralation between John Hancock and Timothy Plan

Given the investment horizon of 90 days John Hancock Multifactor is expected to under-perform the Timothy Plan. In addition to that, John Hancock is 1.13 times more volatile than Timothy Plan LargeMid. It trades about -0.05 of its total potential returns per unit of risk. Timothy Plan LargeMid is currently generating about -0.01 per unit of volatility. If you would invest  4,314  in Timothy Plan LargeMid on December 27, 2024 and sell it today you would lose (23.00) from holding Timothy Plan LargeMid or give up 0.53% of portfolio value over 90 days.

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

John Hancock Multifactor  vs.  Timothy Plan LargeMid

John Hancock Multifactor

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Timothy Plan LargeMid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Plan LargeMid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with John Hancock and Timothy Plan

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

The idea behind John Hancock Multifactor and Timothy Plan LargeMid 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.