Correlation Between Kensington Dynamic and John Hancock

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

By analyzing existing cross correlation between Kensington Dynamic Growth and John Hancock Variable, you can compare the effects of market volatilities on Kensington Dynamic and John Hancock 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 Kensington Dynamic with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Dynamic and John Hancock.

Diversification Opportunities for Kensington Dynamic and John Hancock

-0.22

Correlation Coefficient

Kensington Dynamic  John Hancock

Very good diversification

The 3 months correlation between Kensington and John is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Dynamic Growth and John Hancock Variable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Variable and Kensington Dynamic 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 Kensington Dynamic Growth are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Variable has no effect on the direction of Kensington Dynamic i.e., Kensington Dynamic and John Hancock go up and down completely randomly.

Pair Corralation between Kensington Dynamic and John Hancock

Assuming the 90 days horizon Kensington Dynamic Growth is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kensington Dynamic Growth is 1.07 times less risky than John Hancock. The mutual fund trades about -0.08 of its potential returns per unit of risk. The John Hancock Variable is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,035  in John Hancock Variable on December 22, 2024 and sell it today you would lose (62.00) from holding John Hancock Variable or give up 3.05% of portfolio value over 90 days.

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

Kensington Dynamic Growth  vs.  John Hancock Variable

Kensington Dynamic Growth

Risk-Adjusted Performance

Very Weak

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

John Hancock Variable

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kensington Dynamic and John Hancock

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

The idea behind Kensington Dynamic Growth and John Hancock Variable 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.