Correlation Between John Hancock and Prudential Short-term

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

Diversification Opportunities for John Hancock and Prudential Short-term

-0.32

Correlation Coefficient

John Hancock  Prudential Short-term

Very good diversification

The 3 months correlation between John and Prudential is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term 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 Prudential Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of John Hancock i.e., John Hancock and Prudential Short-term go up and down completely randomly.

Pair Corralation between John Hancock and Prudential Short-term

Assuming the 90 days horizon John Hancock Disciplined is expected to generate 8.44 times more return on investment than Prudential Short-term. However, John Hancock is 8.44 times more volatile than Prudential Short Term Porate. It trades about 0.26 of its potential returns per unit of risk. Prudential Short Term Porate is currently generating about 0.07 per unit of risk. If you would invest  3,038  in John Hancock Disciplined on September 5, 2024 and sell it today you would earn a total of  188.00  from holding John Hancock Disciplined or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

John Hancock Disciplined  vs.  Prudential Short Term Porate

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 forward indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Prudential Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Short Term Porate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Short-term 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 Prudential Short-term

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

The idea behind John Hancock Disciplined and Prudential Short Term Porate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.