Correlation Between John Hancock and PGIM Short

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

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

Diversification Opportunities for John Hancock and PGIM Short

-0.31

Correlation Coefficient

John Hancock  PGIM Short

Very good diversification

The 3 months correlation between John and PGIM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and PGIM Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Short Duration 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 Income are associated (or correlated) with PGIM Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Short Duration has no effect on the direction of John Hancock i.e., John Hancock and PGIM Short go up and down completely randomly.

Pair Corralation between John Hancock and PGIM Short

Considering the 90-day investment horizon John Hancock is expected to generate 2.53 times less return on investment than PGIM Short. But when comparing it to its historical volatility, John Hancock Income is 1.26 times less risky than PGIM Short. It trades about 0.04 of its potential returns per unit of risk. PGIM Short Duration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,655  in PGIM Short Duration on September 2, 2024 and sell it today you would earn a total of  15.00  from holding PGIM Short Duration or generate 0.91% return on investment over 90 days.

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

John Hancock Income  vs.  PGIM Short Duration

John Hancock Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, John Hancock is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PGIM Short Duration

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Short Duration are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PGIM Short is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and PGIM Short

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

The idea behind John Hancock Income and PGIM Short Duration 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.