Correlation Between Arrow Managed and John Hancock

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

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

Diversification Opportunities for Arrow Managed and John Hancock

0.58

Correlation Coefficient

Arrow Managed  John Hancock

Very weak diversification

The 3 months correlation between Arrow and John is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures 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 Arrow Managed 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 Arrow Managed Futures 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 Arrow Managed i.e., Arrow Managed and John Hancock go up and down completely randomly.

Pair Corralation between Arrow Managed and John Hancock

Assuming the 90 days horizon Arrow Managed is expected to generate 25.2 times less return on investment than John Hancock. In addition to that, Arrow Managed is 1.13 times more volatile than John Hancock Variable. It trades about 0.0 of its total potential returns per unit of risk. John Hancock Variable is currently generating about 0.1 per unit of volatility. If you would invest  1,065  in John Hancock Variable on October 4, 2024 and sell it today you would earn a total of  978.00  from holding John Hancock Variable or generate 91.83% return on investment over 90 days.

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

Arrow Managed Futures  vs.  John Hancock Variable

Arrow Managed Futures

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Managed Futures are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Arrow Managed 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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Variable are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arrow Managed and John Hancock

The main advantage of trading using opposite Arrow Managed and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed 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 Arrow Managed Futures 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.