Correlation Between Pax Global and John Hancock

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

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

Diversification Opportunities for Pax Global and John Hancock

0.86

Correlation Coefficient

Pax Global  John Hancock

Very poor diversification

The 3 months correlation between Pax and John is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pax Global Opportunities and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Pax Global 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 Pax Global Opportunities 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 Financial has no effect on the direction of Pax Global i.e., Pax Global and John Hancock go up and down completely randomly.

Pair Corralation between Pax Global and John Hancock

Assuming the 90 days horizon Pax Global Opportunities is expected to generate 0.67 times more return on investment than John Hancock. However, Pax Global Opportunities is 1.5 times less risky than John Hancock. It trades about -0.1 of its potential returns per unit of risk. John Hancock Financial is currently generating about -0.09 per unit of risk. If you would invest  1,709  in Pax Global Opportunities on December 17, 2024 and sell it today you would lose (108.00) from holding Pax Global Opportunities or give up 6.32% of portfolio value over 90 days.

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

Pax Global Opportunities  vs.  John Hancock Financial

Pax Global Opportunities

Risk-Adjusted Performance

Very Weak

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

John Hancock Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest conflicting performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Pair Trading with Pax Global and John Hancock

The main advantage of trading using opposite Pax Global and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Global 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 Pax Global Opportunities and John Hancock Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.