Correlation Between John Hancock and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both John Hancock and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio Emerging, you can compare the effects of market volatilities on John Hancock and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and SPDR Portfolio.
Diversification Opportunities for John Hancock and SPDR Portfolio
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between John and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and SPDR Portfolio Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Emerging 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Emerging has no effect on the direction of John Hancock i.e., John Hancock and SPDR Portfolio go up and down completely randomly.
Pair Corralation between John Hancock and SPDR Portfolio
Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 1.04 times more return on investment than SPDR Portfolio. However, John Hancock is 1.04 times more volatile than SPDR Portfolio Emerging. It trades about 0.04 of its potential returns per unit of risk. SPDR Portfolio Emerging is currently generating about 0.04 per unit of risk. If you would invest 2,348 in John Hancock Multifactor on January 26, 2024 and sell it today you would earn a total of 217.00 from holding John Hancock Multifactor or generate 9.24% 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. SPDR Portfolio Emerging
Performance |
| Timeline |
| John Hancock Multifactor |
| SPDR Portfolio Emerging |
John Hancock and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and SPDR Portfolio
The main advantage of trading using opposite John Hancock and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.The idea behind John Hancock Multifactor and SPDR Portfolio 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.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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