Correlation Between Prudential Jennison and John Hancock
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison 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 Prudential Jennison and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison International and John Hancock International, you can compare the effects of market volatilities on Prudential Jennison 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 Prudential Jennison with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and John Hancock.
Diversification Opportunities for Prudential Jennison and John Hancock
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and John is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Internatio and John Hancock International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Interna and Prudential Jennison 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 Prudential Jennison International 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 Interna has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and John Hancock go up and down completely randomly.
Pair Corralation between Prudential Jennison and John Hancock
Assuming the 90 days horizon Prudential Jennison International is expected to under-perform the John Hancock. In addition to that, Prudential Jennison is 1.16 times more volatile than John Hancock International. It trades about -0.28 of its total potential returns per unit of risk. John Hancock International is currently generating about -0.1 per unit of volatility. If you would invest 2,489 in John Hancock International on January 25, 2024 and sell it today you would lose (47.00) from holding John Hancock International or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Internatio vs. John Hancock International
Performance |
| Timeline |
| Prudential Jennison |
| John Hancock Interna |
Prudential Jennison and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and John Hancock
The main advantage of trading using opposite Prudential Jennison and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison 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.| Prudential Jennison vs. Fidelity Small Cap | Prudential Jennison vs. Fidelity Advisor Mid | Prudential Jennison vs. Aquagold International | Prudential Jennison vs. Morningstar Unconstrained Allocation |
| John Hancock vs. Fidelity Small Cap | John Hancock vs. Fidelity Advisor Mid | John Hancock vs. Aquagold International | John Hancock vs. Morningstar Unconstrained Allocation |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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