Correlation Between Washington Mutual and John Hancock
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and John Hancock 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 Washington Mutual and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and John Hancock Disciplined, you can compare the effects of market volatilities on Washington Mutual and John Hancock 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 Washington Mutual with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and John Hancock.
Diversification Opportunities for Washington Mutual and John Hancock
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and John is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Washington Mutual 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 Washington Mutual Investors are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Disciplined has no effect on the direction of Washington Mutual i.e., Washington Mutual and John Hancock go up and down completely randomly.
Pair Corralation between Washington Mutual and John Hancock
Assuming the 90 days horizon Washington Mutual Investors is expected to under-perform the John Hancock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Washington Mutual Investors is 1.03 times less risky than John Hancock. The mutual fund trades about -0.25 of its potential returns per unit of risk. The John Hancock Disciplined is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 2,432 in John Hancock Disciplined on January 20, 2024 and sell it today you would lose (84.00) from holding John Hancock Disciplined or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. John Hancock Disciplined
Performance |
| Timeline |
| Washington Mutual |
| John Hancock Disciplined |
Washington Mutual and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and John Hancock
The main advantage of trading using opposite Washington Mutual and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.| Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. Investment Of America |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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