Correlation Between John Hancock and Global X
Can any of the company-specific risk be diversified away by investing in both John Hancock and Global X 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 Global X 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 Global X Next, you can compare the effects of market volatilities on John Hancock and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Global X.
Diversification Opportunities for John Hancock and Global X
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between John and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Global X Next in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Next 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Next has no effect on the direction of John Hancock i.e., John Hancock and Global X go up and down completely randomly.
Pair Corralation between John Hancock and Global X
Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 1.66 times more return on investment than Global X. However, John Hancock is 1.66 times more volatile than Global X Next. It trades about 0.12 of its potential returns per unit of risk. Global X Next is currently generating about 0.15 per unit of risk. If you would invest 2,274 in John Hancock Multifactor on January 26, 2024 and sell it today you would earn a total of 291.00 from holding John Hancock Multifactor or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Multifactor vs. Global X Next
Performance |
| Timeline |
| John Hancock Multifactor |
| Global X Next |
John Hancock and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Global X
The main advantage of trading using opposite John Hancock and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind John Hancock Multifactor and Global X Next 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 CEOs Directory module to screen CEOs from public companies around the world.
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