Correlation Between John Hancock and Sp 500

Can any of the company-specific risk be diversified away by investing in both John Hancock and Sp 500 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 Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between John Hancock Financial and Sp 500 Fund, you can compare the effects of market volatilities on John Hancock and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Sp 500.

Diversification Opportunities for John Hancock and Sp 500

0.85

Correlation Coefficient

John Hancock  Sp 500

Very poor diversification

The 3 months correlation between John and RYSOX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Sp 500 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Fund 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 Financial are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Fund has no effect on the direction of John Hancock i.e., John Hancock and Sp 500 go up and down completely randomly.

Pair Corralation between John Hancock and Sp 500

Considering the 90-day investment horizon John Hancock Financial is expected to generate 2.25 times more return on investment than Sp 500. However, John Hancock is 2.25 times more volatile than Sp 500 Fund. It trades about 0.33 of its potential returns per unit of risk. Sp 500 Fund is currently generating about 0.2 per unit of risk. If you would invest  3,414  in John Hancock Financial on August 31, 2024 and sell it today you would earn a total of  526.00  from holding John Hancock Financial or generate 15.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

John Hancock Financial  vs.  Sp 500 Fund

John Hancock Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Sp 500 Fund

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sp 500 Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating basic indicators, Sp 500 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with John Hancock and Sp 500

The main advantage of trading using opposite John Hancock and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.

The idea behind John Hancock Financial and Sp 500 Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.