Correlation Between Vanguard Explorer and John Hancock

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

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

Diversification Opportunities for Vanguard Explorer and John Hancock

-0.11

Correlation Coefficient

Vanguard Explorer  John Hancock

Good diversification

The 3 months correlation between Vanguard and John is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund 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 Vanguard Explorer 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 Vanguard Explorer 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 Funds has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and John Hancock go up and down completely randomly.

Pair Corralation between Vanguard Explorer and John Hancock

Assuming the 90 days horizon Vanguard Explorer Fund is expected to under-perform the John Hancock. In addition to that, Vanguard Explorer is 3.23 times more volatile than John Hancock Funds. It trades about -0.12 of its total potential returns per unit of risk. John Hancock Funds is currently generating about 0.06 per unit of volatility. If you would invest  1,082  in John Hancock Funds on December 29, 2024 and sell it today you would earn a total of  14.00  from holding John Hancock Funds or generate 1.29% return on investment over 90 days.

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

Vanguard Explorer Fund  vs.  John Hancock Funds

Vanguard Explorer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Explorer Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

John Hancock Funds

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Funds are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, 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 Vanguard Explorer and John Hancock

The main advantage of trading using opposite Vanguard Explorer and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer 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 Vanguard Explorer Fund and John Hancock Funds 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.