Correlation Between Invesco California and John Hancock

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

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

Diversification Opportunities for Invesco California and John Hancock

-0.38

Correlation Coefficient

Invesco California  John Hancock

Very good diversification

The 3 months correlation between Invesco and John is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value 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 Invesco California 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 Invesco California Value 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 Invesco California i.e., Invesco California and John Hancock go up and down completely randomly.

Pair Corralation between Invesco California and John Hancock

Considering the 90-day investment horizon Invesco California Value is expected to generate 1.68 times more return on investment than John Hancock. However, Invesco California is 1.68 times more volatile than John Hancock Income. It trades about 0.15 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.03 per unit of risk. If you would invest  1,035  in Invesco California Value on December 1, 2024 and sell it today you would earn a total of  74.00  from holding Invesco California Value or generate 7.15% return on investment over 90 days.

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

Invesco California Value  vs.  John Hancock Income

Invesco California Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco California Value are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Invesco California may actually be approaching a critical reversion point that can send shares even higher in April 2025.

John Hancock Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 2 (%) 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 Invesco California and John Hancock

The main advantage of trading using opposite Invesco California and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California 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 Invesco California Value 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.