Correlation Between Morgan Stanley and John Hancock

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

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

Diversification Opportunities for Morgan Stanley and John Hancock

-0.46

Correlation Coefficient

Morgan Stanley  John Hancock

Very good diversification

The 3 months correlation between Morgan and John is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Morgan Stanley 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 Morgan Stanley Direct 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 Disciplined has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and John Hancock go up and down completely randomly.

Pair Corralation between Morgan Stanley and John Hancock

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.36 times more return on investment than John Hancock. However, Morgan Stanley is 1.36 times more volatile than John Hancock Disciplined. It trades about 0.35 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.29 per unit of risk. If you would invest  2,027  in Morgan Stanley Direct on October 22, 2024 and sell it today you would earn a total of  116.00  from holding Morgan Stanley Direct or generate 5.72% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  John Hancock Disciplined

Morgan Stanley Direct

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in February 2025.

John Hancock Disciplined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Disciplined has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Morgan Stanley and John Hancock

The main advantage of trading using opposite Morgan Stanley and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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 Morgan Stanley Direct and John Hancock Disciplined 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.