Correlation Between Pimco Corporate and John Hancock

Can any of the company-specific risk be diversified away by investing in both Pimco Corporate 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 Corporate 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 Corporate Income and John Hancock Financial, you can compare the effects of market volatilities on Pimco Corporate 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 Corporate with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Corporate and John Hancock.

Diversification Opportunities for Pimco Corporate and John Hancock

0.42

Correlation Coefficient

Pimco Corporate  John Hancock

Very weak diversification

The 3 months correlation between Pimco and John is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income 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 Pimco Corporate 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 Corporate Income 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 Pimco Corporate i.e., Pimco Corporate and John Hancock go up and down completely randomly.

Pair Corralation between Pimco Corporate and John Hancock

Considering the 90-day investment horizon Pimco Corporate is expected to generate 2.64 times less return on investment than John Hancock. But when comparing it to its historical volatility, Pimco Corporate Income is 3.08 times less risky than John Hancock. It trades about 0.09 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,715  in John Hancock Financial on December 2, 2024 and sell it today you would earn a total of  850.00  from holding John Hancock Financial or generate 31.31% return on investment over 90 days.

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

Pimco Corporate Income  vs.  John Hancock Financial

Pimco Corporate Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Corporate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 Pimco Corporate and John Hancock

The main advantage of trading using opposite Pimco Corporate and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Corporate 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 Corporate Income 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.