Correlation Between JPMorgan Diversified and John Hancock

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

By analyzing existing cross correlation between JPMorgan Diversified Return and John Hancock Multifactor, you can compare the effects of market volatilities on JPMorgan Diversified and John Hancock 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 JPMorgan Diversified with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Diversified and John Hancock.

Diversification Opportunities for JPMorgan Diversified and John Hancock

-0.37

Correlation Coefficient

JPMorgan Diversified  John Hancock

Very good diversification

The 3 months correlation between JPMorgan and John is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and John Hancock Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Multifactor and JPMorgan Diversified 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 JPMorgan Diversified Return are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Multifactor has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and John Hancock go up and down completely randomly.

Pair Corralation between JPMorgan Diversified and John Hancock

Given the investment horizon of 90 days JPMorgan Diversified Return is expected to generate 0.79 times more return on investment than John Hancock. However, JPMorgan Diversified Return is 1.27 times less risky than John Hancock. It trades about 0.17 of its potential returns per unit of risk. John Hancock Multifactor is currently generating about -0.07 per unit of risk. If you would invest  5,340  in JPMorgan Diversified Return on December 28, 2024 and sell it today you would earn a total of  412.79  from holding JPMorgan Diversified Return or generate 7.73% return on investment over 90 days.

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

JPMorgan Diversified Return  vs.  John Hancock Multifactor

JPMorgan Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, JPMorgan Diversified may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. Despite quite persistent primary indicators, John Hancock is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with JPMorgan Diversified and John Hancock

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

The idea behind JPMorgan Diversified Return and John Hancock Multifactor 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.