Correlation Between Butterfly Network and John Hancock

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

By analyzing existing cross correlation between Butterfly Network and John Hancock Disciplined, you can compare the effects of market volatilities on Butterfly Network 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 Butterfly Network with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and John Hancock.

Diversification Opportunities for Butterfly Network and John Hancock

-0.04

Correlation Coefficient

Butterfly Network  John Hancock

Good diversification

The 3 months correlation between Butterfly and John is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network 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 Butterfly Network 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 Butterfly Network 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 Butterfly Network i.e., Butterfly Network and John Hancock go up and down completely randomly.

Pair Corralation between Butterfly Network and John Hancock

Given the investment horizon of 90 days Butterfly Network is expected to under-perform the John Hancock. In addition to that, Butterfly Network is 8.8 times more volatile than John Hancock Disciplined. It trades about -0.03 of its total potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.07 per unit of volatility. If you would invest  1,346  in John Hancock Disciplined on January 26, 2024 and sell it today you would earn a total of  180.00  from holding John Hancock Disciplined or generate 13.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Butterfly Network  vs.  John Hancock Disciplined

Butterfly Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Butterfly Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

John Hancock Disciplined

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Butterfly Network and John Hancock

The main advantage of trading using opposite Butterfly Network and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network 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.

The idea behind Butterfly Network and John Hancock Disciplined 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.