Correlation Between John Hancock and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both John Hancock and Vanguard 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 Vanguard 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 Vanguard FTSE Emerging, you can compare the effects of market volatilities on John Hancock and Vanguard 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 Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Vanguard FTSE.
Diversification Opportunities for John Hancock and Vanguard FTSE
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between John and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE 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 Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of John Hancock i.e., John Hancock and Vanguard FTSE go up and down completely randomly.
Pair Corralation between John Hancock and Vanguard FTSE
Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 1.02 times more return on investment than Vanguard FTSE. However, John Hancock is 1.02 times more volatile than Vanguard FTSE Emerging. It trades about 0.04 of its potential returns per unit of risk. Vanguard FTSE Emerging is currently generating about 0.03 per unit of risk. If you would invest 2,337 in John Hancock Multifactor on January 19, 2024 and sell it today you would earn a total of 184.00 from holding John Hancock Multifactor or generate 7.87% 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. Vanguard FTSE Emerging
Performance |
| Timeline |
| John Hancock Multifactor |
| Vanguard FTSE Emerging |
John Hancock and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Vanguard FTSE
The main advantage of trading using opposite John Hancock and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Vanguard 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.| John Hancock vs. John Hancock Multifactor | John Hancock vs. John Hancock Multifactor | John Hancock vs. John Hancock Multifactor | John Hancock vs. PIMCO RAFI Dynamic |
| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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