Correlation Between John Hancock and Vanguard Mid-cap

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

Diversification Opportunities for John Hancock and Vanguard Mid-cap

0.98

Correlation Coefficient

John Hancock  Vanguard Mid-cap

Almost no diversification

The 3 months correlation between John and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Vanguard Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of John Hancock i.e., John Hancock and Vanguard Mid-cap go up and down completely randomly.

Pair Corralation between John Hancock and Vanguard Mid-cap

Assuming the 90 days horizon John Hancock Disciplined is expected to generate 1.26 times more return on investment than Vanguard Mid-cap. However, John Hancock is 1.26 times more volatile than Vanguard Mid Cap Value. It trades about 0.16 of its potential returns per unit of risk. Vanguard Mid Cap Value is currently generating about 0.2 per unit of risk. If you would invest  2,982  in John Hancock Disciplined on August 31, 2024 and sell it today you would earn a total of  259.00  from holding John Hancock Disciplined or generate 8.69% 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.  Vanguard Mid Cap Value

John Hancock Disciplined

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 12 (%) 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 December 2024.

Vanguard Mid Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Value are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Mid-cap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with John Hancock and Vanguard Mid-cap

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

The idea behind John Hancock Disciplined and Vanguard Mid Cap Value 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.