Correlation Between PGIM Short and John Hancock

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

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

Diversification Opportunities for PGIM Short and John Hancock

0.51

Correlation Coefficient

PGIM Short  John Hancock

Very weak diversification

The 3 months correlation between PGIM and John is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and PGIM Short 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 PGIM Short Duration 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 Income has no effect on the direction of PGIM Short i.e., PGIM Short and John Hancock go up and down completely randomly.

Pair Corralation between PGIM Short and John Hancock

Given the investment horizon of 90 days PGIM Short Duration is expected to generate 0.81 times more return on investment than John Hancock. However, PGIM Short Duration is 1.23 times less risky than John Hancock. It trades about 0.19 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.07 per unit of risk. If you would invest  1,590  in PGIM Short Duration on December 27, 2024 and sell it today you would earn a total of  68.00  from holding PGIM Short Duration or generate 4.28% return on investment over 90 days.

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

PGIM Short Duration  vs.  John Hancock Income

PGIM Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Short Duration are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PGIM Short is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, John Hancock is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PGIM Short and John Hancock

The main advantage of trading using opposite PGIM Short and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Short 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 PGIM Short Duration and John Hancock Income 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.