Correlation Between Short Term and John Hancock

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

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

Diversification Opportunities for Short Term and John Hancock

-0.43

Correlation Coefficient

Short Term  John Hancock

Very good diversification

The 3 months correlation between Short and John is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Short Term 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 Short Term Government 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 Global has no effect on the direction of Short Term i.e., Short Term and John Hancock go up and down completely randomly.

Pair Corralation between Short Term and John Hancock

Assuming the 90 days horizon Short Term is expected to generate 2.56 times less return on investment than John Hancock. But when comparing it to its historical volatility, Short Term Government Fund is 3.9 times less risky than John Hancock. It trades about 0.08 of its potential returns per unit of risk. John Hancock Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,014  in John Hancock Global on October 25, 2024 and sell it today you would earn a total of  169.00  from holding John Hancock Global or generate 16.67% return on investment over 90 days.

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

Short Term Government Fund  vs.  John Hancock Global

Short Term Government

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Government Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short Term and John Hancock

The main advantage of trading using opposite Short Term and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Term 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 Short Term Government Fund and John Hancock Global 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.