Correlation Between John Hancock and Midcap Fund

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

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

Diversification Opportunities for John Hancock and Midcap Fund

0.77

Correlation Coefficient

John Hancock  Midcap Fund

Poor diversification

The 3 months correlation between John and Midcap is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Midcap Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Institutional 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 Disciplined are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Institutional has no effect on the direction of John Hancock i.e., John Hancock and Midcap Fund go up and down completely randomly.

Pair Corralation between John Hancock and Midcap Fund

Assuming the 90 days horizon John Hancock Disciplined is expected to under-perform the Midcap Fund. In addition to that, John Hancock is 2.11 times more volatile than Midcap Fund Institutional. It trades about -0.32 of its total potential returns per unit of risk. Midcap Fund Institutional is currently generating about -0.36 per unit of volatility. If you would invest  4,844  in Midcap Fund Institutional on October 9, 2024 and sell it today you would lose (402.00) from holding Midcap Fund Institutional or give up 8.3% of portfolio value over 90 days.

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

John Hancock Disciplined  vs.  Midcap Fund Institutional

John Hancock Disciplined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Disciplined has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Midcap Fund Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midcap Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Midcap Fund 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 Midcap Fund

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

The idea behind John Hancock Disciplined and Midcap Fund Institutional 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.