Correlation Between Kinetics Small and John Hancock

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

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

Diversification Opportunities for Kinetics Small and John Hancock

0.17

Correlation Coefficient

Kinetics Small  John Hancock

Average diversification

The 3 months correlation between Kinetics and John is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and John Hancock Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Focused and Kinetics Small 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 Kinetics Small Cap 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 Focused has no effect on the direction of Kinetics Small i.e., Kinetics Small and John Hancock go up and down completely randomly.

Pair Corralation between Kinetics Small and John Hancock

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the John Hancock. In addition to that, Kinetics Small is 14.14 times more volatile than John Hancock Focused. It trades about -0.43 of its total potential returns per unit of risk. John Hancock Focused is currently generating about -0.18 per unit of volatility. If you would invest  307.00  in John Hancock Focused on September 24, 2024 and sell it today you would lose (2.00) from holding John Hancock Focused or give up 0.65% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  John Hancock Focused

Kinetics Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

John Hancock Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Kinetics Small and John Hancock

The main advantage of trading using opposite Kinetics Small and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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 Kinetics Small Cap and John Hancock Focused 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.