Correlation Between College Retirement and John Hancock

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

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

Diversification Opportunities for College Retirement and John Hancock

0.96

Correlation Coefficient

College Retirement  John Hancock

Almost no diversification

The 3 months correlation between College and John is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities 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 College Retirement 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 College Retirement Equities 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 College Retirement i.e., College Retirement and John Hancock go up and down completely randomly.

Pair Corralation between College Retirement and John Hancock

Assuming the 90 days trading horizon College Retirement Equities is expected to generate 0.97 times more return on investment than John Hancock. However, College Retirement Equities is 1.03 times less risky than John Hancock. It trades about 0.13 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.08 per unit of risk. If you would invest  40,598  in College Retirement Equities on September 12, 2024 and sell it today you would earn a total of  11,802  from holding College Retirement Equities or generate 29.07% return on investment over 90 days.

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

College Retirement Equities  vs.  John Hancock Disciplined

College Retirement

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, College Retirement may actually be approaching a critical reversion point that can send shares even higher in January 2025.

John Hancock Disciplined

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with College Retirement and John Hancock

The main advantage of trading using opposite College Retirement and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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 College Retirement Equities 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.