Correlation Between Legg Mason and John Hancock
Can any of the company-specific risk be diversified away by investing in both Legg Mason 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 Legg Mason and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Partners and John Hancock Funds, you can compare the effects of market volatilities on Legg Mason 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 Legg Mason with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and John Hancock.
Diversification Opportunities for Legg Mason and John Hancock
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and John is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Partners and John Hancock Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Funds and Legg Mason 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 Legg Mason Partners 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 Funds has no effect on the direction of Legg Mason i.e., Legg Mason and John Hancock go up and down completely randomly.
Pair Corralation between Legg Mason and John Hancock
Assuming the 90 days trading horizon Legg Mason Partners is expected to under-perform the John Hancock. In addition to that, Legg Mason is 1.57 times more volatile than John Hancock Funds. It trades about -0.08 of its total potential returns per unit of risk. John Hancock Funds is currently generating about 0.0 per unit of volatility. If you would invest 1,110 in John Hancock Funds on December 1, 2024 and sell it today you would lose (1.00) from holding John Hancock Funds or give up 0.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Legg Mason Partners vs. John Hancock Funds
Performance |
Timeline |
Legg Mason Partners |
John Hancock Funds |
Legg Mason and John Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legg Mason and John Hancock
The main advantage of trading using opposite Legg Mason and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason 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.Legg Mason vs. Vanguard Energy Index | Legg Mason vs. Pimco Energy Tactical | Legg Mason vs. Transamerica Mlp Energy | Legg Mason vs. Alpsalerian Energy Infrastructure |
John Hancock vs. Elfun Diversified Fund | John Hancock vs. Jpmorgan Diversified Fund | John Hancock vs. American Century Diversified | John Hancock vs. Global Diversified Income |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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