Correlation Between John Hancock and Invesco Trust

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

Diversification Opportunities for John Hancock and Invesco Trust

0.44

Correlation Coefficient

John Hancock  Invesco Trust

Very weak diversification

The 3 months correlation between John and Invesco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of John Hancock i.e., John Hancock and Invesco Trust go up and down completely randomly.

Pair Corralation between John Hancock and Invesco Trust

Considering the 90-day investment horizon John Hancock is expected to generate 1.38 times less return on investment than Invesco Trust. But when comparing it to its historical volatility, John Hancock Income is 1.39 times less risky than Invesco Trust. It trades about 0.07 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Invesco Trust For on December 27, 2024 and sell it today you would earn a total of  25.00  from holding Invesco Trust For or generate 2.6% return on investment over 90 days.

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

John Hancock Income  vs.  Invesco Trust For

John Hancock Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Invesco Trust For

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Trust For are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Invesco Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Invesco Trust

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

The idea behind John Hancock Income and Invesco Trust For 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.