Correlation Between Microsoft Corp and John Hancock

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

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

Diversification Opportunities for Microsoft Corp and John Hancock

0.32
  Correlation Coefficient
Microsoft Corp
John Hancock Disciplined

Weak diversification

The 3 months correlation between Microsoft and JDITX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp i.e., Microsoft Corp and John Hancock go up and down completely randomly.

Pair Corralation between Microsoft Corp and John Hancock

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.38 times more return on investment than John Hancock. However, Microsoft Corp is 1.38 times more volatile than John Hancock Disciplined. It trades about 0.14 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.1 per unit of risk. If you would invest  27,701  in Microsoft Corp on July 18, 2021 and sell it today you would earn a total of  2,720  from holding Microsoft Corp or generate 9.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.46%
ValuesDaily Returns

Microsoft Corp  vs.  John Hancock Disciplined

 Performance (%) 
      Timeline 
Microsoft Corp 
 Microsoft Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in November 2021.

Microsoft Price Channel

John Hancock Disciplined 
 JDITX Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microsoft Corp and John Hancock Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Microsoft Corp and John Hancock

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

Microsoft Corp

Pair trading matchups for Microsoft Corp

The idea behind Microsoft Corp 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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