Correlation Between Oakmark International and John Hancock

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

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

Diversification Opportunities for Oakmark International and John Hancock

0.83

Correlation Coefficient

Oakmark International  John Hancock

Very poor diversification

The 3 months correlation between Oakmark and John is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund 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 Oakmark International 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 Oakmark International Fund 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 Oakmark International i.e., Oakmark International and John Hancock go up and down completely randomly.

Pair Corralation between Oakmark International and John Hancock

Assuming the 90 days horizon Oakmark International is expected to generate 7.44 times less return on investment than John Hancock. In addition to that, Oakmark International is 1.22 times more volatile than John Hancock Disciplined. It trades about 0.01 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  1,343  in John Hancock Disciplined on January 26, 2024 and sell it today you would earn a total of  183.00  from holding John Hancock Disciplined or generate 13.63% return on investment over 90 days.

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

Oakmark International Fund  vs.  John Hancock Disciplined

Oakmark International

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Oakmark International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Disciplined

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Disciplined are ranked lower than 13 (%) 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 Oakmark International and John Hancock

The main advantage of trading using opposite Oakmark International and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International 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 Oakmark International Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.