Correlation Between Qs Small and John Hancock

Can any of the company-specific risk be diversified away by investing in both Qs 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 Qs 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 Qs Small Capitalization and John Hancock Government, you can compare the effects of market volatilities on Qs 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 Qs Small with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Small and John Hancock.

Diversification Opportunities for Qs Small and John Hancock

0.21

Correlation Coefficient

Qs Small  John Hancock

Modest diversification

The 3 months correlation between LMBMX and John is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Qs Small Capitalization and John Hancock Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Government and Qs 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 Qs Small Capitalization 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 Government has no effect on the direction of Qs Small i.e., Qs Small and John Hancock go up and down completely randomly.

Pair Corralation between Qs Small and John Hancock

Assuming the 90 days horizon Qs Small Capitalization is expected to under-perform the John Hancock. In addition to that, Qs Small is 5.98 times more volatile than John Hancock Government. It trades about -0.28 of its total potential returns per unit of risk. John Hancock Government is currently generating about -0.44 per unit of volatility. If you would invest  787.00  in John Hancock Government on October 8, 2024 and sell it today you would lose (18.00) from holding John Hancock Government or give up 2.29% of portfolio value over 90 days.

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

Qs Small Capitalization  vs.  John Hancock Government

Qs Small Capitalization

Risk-Adjusted Performance

0 of 100

Very Weak

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

John Hancock Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Qs Small and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs 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 Qs Small Capitalization and John Hancock Government 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.