Correlation Between John Hancock and Financials Ultrasector

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

By analyzing existing cross correlation between John Hancock Financial and Financials Ultrasector Profund, you can compare the effects of market volatilities on John Hancock and Financials Ultrasector 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 Financials Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Financials Ultrasector.

Diversification Opportunities for John Hancock and Financials Ultrasector

0.94

Correlation Coefficient

John Hancock  Financials Ultrasector

Almost no diversification

The 3 months correlation between John and Financials is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Financials Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financials Ultrasector 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 Financial are associated (or correlated) with Financials Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financials Ultrasector has no effect on the direction of John Hancock i.e., John Hancock and Financials Ultrasector go up and down completely randomly.

Pair Corralation between John Hancock and Financials Ultrasector

Considering the 90-day investment horizon John Hancock is expected to generate 1.09 times less return on investment than Financials Ultrasector. But when comparing it to its historical volatility, John Hancock Financial is 1.09 times less risky than Financials Ultrasector. It trades about 0.07 of its potential returns per unit of risk. Financials Ultrasector Profund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,218  in Financials Ultrasector Profund on May 4, 2025 and sell it today you would earn a total of  228.00  from holding Financials Ultrasector Profund or generate 5.41% return on investment over 90 days.

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

John Hancock Financial  vs.  Financials Ultrasector Profund

John Hancock Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Financials Ultrasector

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Financials Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Financials Ultrasector

The main advantage of trading using opposite John Hancock and Financials Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Financials Ultrasector 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 Financials Ultrasector will offset losses from the drop in Financials Ultrasector's long position.

The idea behind John Hancock Financial and Financials Ultrasector Profund 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.