Correlation Between John Hancock and Neuberger Berman

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

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

Diversification Opportunities for John Hancock and Neuberger Berman

0.72

Correlation Coefficient

John Hancock  Neuberger Berman

Poor diversification

The 3 months correlation between John and Neuberger is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Premium and Neuberger Berman IMF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman IMF and John Hancock 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 John Hancock Premium are associated (or correlated) with Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman IMF has no effect on the direction of John Hancock i.e., John Hancock and Neuberger Berman go up and down completely randomly.

Pair Corralation between John Hancock and Neuberger Berman

Considering the 90-day investment horizon John Hancock Premium is expected to under-perform the Neuberger Berman. In addition to that, John Hancock is 1.17 times more volatile than Neuberger Berman IMF. It trades about -0.01 of its total potential returns per unit of risk. Neuberger Berman IMF is currently generating about 0.01 per unit of volatility. If you would invest  1,079  in Neuberger Berman IMF on November 29, 2024 and sell it today you would earn a total of  2.00  from holding Neuberger Berman IMF or generate 0.19% return on investment over 90 days.

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

John Hancock Premium  vs.  Neuberger Berman IMF

John Hancock Premium

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Premium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, John Hancock is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Neuberger Berman IMF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuberger Berman IMF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Neuberger Berman is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with John Hancock and Neuberger Berman

The main advantage of trading using opposite John Hancock and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman's long position.

The idea behind John Hancock Premium and Neuberger Berman IMF 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.