Correlation Between Pimco Income and John Hancock

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

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

Diversification Opportunities for Pimco Income and John Hancock

-0.27

Correlation Coefficient

Pimco Income  John Hancock

Very good diversification

The 3 months correlation between Pimco and John is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund 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 Pimco Income 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 Pimco Income Fund 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 Pimco Income i.e., Pimco Income and John Hancock go up and down completely randomly.

Pair Corralation between Pimco Income and John Hancock

Assuming the 90 days horizon Pimco Income is expected to generate 44.97 times less return on investment than John Hancock. But when comparing it to its historical volatility, Pimco Income Fund is 4.14 times less risky than John Hancock. It trades about 0.02 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,957  in John Hancock Disciplined on September 5, 2024 and sell it today you would earn a total of  269.00  from holding John Hancock Disciplined or generate 9.1% return on investment over 90 days.

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

Pimco Income Fund  vs.  John Hancock Disciplined

Pimco Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Disciplined

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pimco Income and John Hancock

The main advantage of trading using opposite Pimco Income and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income 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 Pimco Income Fund 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.