Correlation Between John Hancock and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both John Hancock and Vanguard Health 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 Vanguard Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Variable and Vanguard Health Care, you can compare the effects of market volatilities on John Hancock and Vanguard Health 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 Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Vanguard Health.
Diversification Opportunities for John Hancock and Vanguard Health
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Variable and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care 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 Variable are associated (or correlated) with Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of John Hancock i.e., John Hancock and Vanguard Health go up and down completely randomly.
Pair Corralation between John Hancock and Vanguard Health
Assuming the 90 days horizon John Hancock Variable is expected to under-perform the Vanguard Health. In addition to that, John Hancock is 1.25 times more volatile than Vanguard Health Care. It trades about -0.05 of its total potential returns per unit of risk. Vanguard Health Care is currently generating about 0.03 per unit of volatility. If you would invest 21,254 in Vanguard Health Care on February 28, 2024 and sell it today you would earn a total of 247.00 from holding Vanguard Health Care or generate 1.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
John Hancock Variable vs. Vanguard Health Care
Performance |
Timeline |
John Hancock Variable |
Vanguard Health Care |
John Hancock and Vanguard Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with John Hancock and Vanguard Health
The main advantage of trading using opposite John Hancock and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Vanguard Health 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 Vanguard Health will offset losses from the drop in Vanguard Health's long position.John Hancock vs. Vanguard Total Stock | John Hancock vs. Vanguard 500 Index | John Hancock vs. Vanguard Total Stock | John Hancock vs. Vanguard Total Stock |
Vanguard Health vs. T Rowe Price | Vanguard Health vs. T Rowe Price | Vanguard Health vs. T Rowe Price | Vanguard Health vs. T Rowe Price |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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