Correlation Between John Hancock and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both John Hancock and Invesco FTSE 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 Invesco FTSE 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 Invesco FTSE RAFI, you can compare the effects of market volatilities on John Hancock and Invesco FTSE 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 Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Invesco FTSE.
Diversification Opportunities for John Hancock and Invesco FTSE
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and Invesco is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of John Hancock i.e., John Hancock and Invesco FTSE go up and down completely randomly.
Pair Corralation between John Hancock and Invesco FTSE
Given the investment horizon of 90 days John Hancock Multifactor is expected to under-perform the Invesco FTSE. But the etf apears to be less risky and, when comparing its historical volatility, John Hancock Multifactor is 1.04 times less risky than Invesco FTSE. The etf trades about -0.04 of its potential returns per unit of risk. The Invesco FTSE RAFI is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,931 in Invesco FTSE RAFI on January 25, 2024 and sell it today you would earn a total of 7.00 from holding Invesco FTSE RAFI or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Multifactor vs. Invesco FTSE RAFI
Performance |
| Timeline |
| John Hancock Multifactor |
| Invesco FTSE RAFI |
John Hancock and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Invesco FTSE
The main advantage of trading using opposite John Hancock and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.The idea behind John Hancock Multifactor and Invesco FTSE RAFI 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.Check out your portfolio center.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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