Correlation Between John Hancock and Schwab Fundamental

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Can any of the company-specific risk be diversified away by investing in both John Hancock and Schwab Fundamental 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 John Hancock and Schwab Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Multifactor and Schwab Fundamental Emerging, you can compare the effects of market volatilities on John Hancock and Schwab Fundamental 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 John Hancock with a short position of Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Schwab Fundamental.

Diversification Opportunities for John Hancock and Schwab Fundamental

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between John and Schwab is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Schwab Fundamental Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental and John Hancock 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 John Hancock Multifactor are associated (or correlated) with Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental has no effect on the direction of John Hancock i.e., John Hancock and Schwab Fundamental go up and down completely randomly.

Pair Corralation between John Hancock and Schwab Fundamental

Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 0.9 times more return on investment than Schwab Fundamental. However, John Hancock Multifactor is 1.12 times less risky than Schwab Fundamental. It trades about 0.06 of its potential returns per unit of risk. Schwab Fundamental Emerging is currently generating about 0.02 per unit of risk. If you would invest  2,561  in John Hancock Multifactor on December 29, 2023 and sell it today you would earn a total of  21.00  from holding John Hancock Multifactor or generate 0.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

John Hancock Multifactor  vs.  Schwab Fundamental Emerging

 Performance 
       Timeline  
John Hancock Multifactor 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Multifactor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Schwab Fundamental 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Fundamental Emerging are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Schwab Fundamental is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

John Hancock and Schwab Fundamental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with John Hancock and Schwab Fundamental

The main advantage of trading using opposite John Hancock and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Schwab Fundamental 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 Schwab Fundamental will offset losses from the drop in Schwab Fundamental's long position.
The idea behind John Hancock Multifactor and Schwab Fundamental Emerging 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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