Correlation Between John Hancock and Blackrock Government

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

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

Diversification Opportunities for John Hancock and Blackrock Government

1.0

Correlation Coefficient

John Hancock  Blackrock Government

No risk reduction

The 3 months correlation between John and Blackrock is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Government and Blackrock Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Government Bond 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 Government are associated (or correlated) with Blackrock Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Government Bond has no effect on the direction of John Hancock i.e., John Hancock and Blackrock Government go up and down completely randomly.

Pair Corralation between John Hancock and Blackrock Government

Assuming the 90 days horizon John Hancock is expected to generate 1.71 times less return on investment than Blackrock Government. But when comparing it to its historical volatility, John Hancock Government is 1.07 times less risky than Blackrock Government. It trades about 0.07 of its potential returns per unit of risk. Blackrock Government Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  906.00  in Blackrock Government Bond on September 5, 2024 and sell it today you would earn a total of  8.00  from holding Blackrock Government Bond or generate 0.88% 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 Government  vs.  Blackrock Government Bond

John Hancock Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Blackrock Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Blackrock Government

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

The idea behind John Hancock Government and Blackrock Government Bond 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.