Correlation Between John Hancock and Longleaf Partners

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

Diversification Opportunities for John Hancock and Longleaf Partners

0.9

Correlation Coefficient

John Hancock  Longleaf Partners

Almost no diversification

The 3 months correlation between John and Longleaf is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of John Hancock i.e., John Hancock and Longleaf Partners go up and down completely randomly.

Pair Corralation between John Hancock and Longleaf Partners

Assuming the 90 days horizon John Hancock Disciplined is expected to generate 1.24 times more return on investment than Longleaf Partners. However, John Hancock is 1.24 times more volatile than Longleaf Partners Fund. It trades about 0.17 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.17 per unit of risk. If you would invest  2,826  in John Hancock Disciplined on September 3, 2024 and sell it today you would earn a total of  249.00  from holding John Hancock Disciplined or generate 8.81% return on investment over 90 days.

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

John Hancock Disciplined  vs.  Longleaf Partners Fund

John Hancock Disciplined

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Longleaf Partners

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Longleaf Partners Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Longleaf Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John Hancock and Longleaf Partners

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

The idea behind John Hancock Disciplined and Longleaf Partners Fund 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..