Correlation Between Jpmorgan Growth and John Hancock

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

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

Diversification Opportunities for Jpmorgan Growth and John Hancock

0.8

Correlation Coefficient

Jpmorgan Growth  John Hancock

Very poor diversification

The 3 months correlation between Jpmorgan and John is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Growth Advantage and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Jpmorgan Growth 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 Jpmorgan Growth Advantage 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 Disciplined has no effect on the direction of Jpmorgan Growth i.e., Jpmorgan Growth and John Hancock go up and down completely randomly.

Pair Corralation between Jpmorgan Growth and John Hancock

Assuming the 90 days horizon Jpmorgan Growth Advantage is expected to under-perform the John Hancock. In addition to that, Jpmorgan Growth is 1.76 times more volatile than John Hancock Disciplined. It trades about -0.11 of its total potential returns per unit of risk. John Hancock Disciplined is currently generating about -0.01 per unit of volatility. If you would invest  2,364  in John Hancock Disciplined on December 29, 2024 and sell it today you would lose (17.00) from holding John Hancock Disciplined or give up 0.72% of portfolio value over 90 days.

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

Jpmorgan Growth Advantage  vs.  John Hancock Disciplined

Jpmorgan Growth Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Growth Advantage 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 Disciplined

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Disciplined 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 Jpmorgan Growth and John Hancock

The main advantage of trading using opposite Jpmorgan Growth and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Growth 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 Jpmorgan Growth Advantage and John Hancock Disciplined 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.