Correlation Between John Hancock and Locorr Market

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

Diversification Opportunities for John Hancock and Locorr Market

-0.45

Correlation Coefficient

John Hancock  Locorr Market

Very good diversification

The 3 months correlation between John and Locorr is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of John Hancock i.e., John Hancock and Locorr Market go up and down completely randomly.

Pair Corralation between John Hancock and Locorr Market

Assuming the 90 days horizon John Hancock Income is expected to generate 0.29 times more return on investment than Locorr Market. However, John Hancock Income is 3.41 times less risky than Locorr Market. It trades about 0.14 of its potential returns per unit of risk. Locorr Market Trend is currently generating about -0.04 per unit of risk. If you would invest  576.00  in John Hancock Income on December 19, 2024 and sell it today you would earn a total of  9.00  from holding John Hancock Income or generate 1.56% return on investment over 90 days.

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

John Hancock Income  vs.  Locorr Market Trend

John Hancock Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Locorr Market Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Locorr Market Trend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Locorr Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Locorr Market

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

The idea behind John Hancock Income and Locorr Market Trend 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.