Correlation Between John Hancock and Smallcap

Can any of the company-specific risk be diversified away by investing in both John Hancock and Smallcap 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 Smallcap 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 Smallcap Sp 600, you can compare the effects of market volatilities on John Hancock and Smallcap 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 Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Smallcap.

Diversification Opportunities for John Hancock and Smallcap

0.86

Correlation Coefficient

John Hancock  Smallcap

Very poor diversification

The 3 months correlation between John and Smallcap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 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 Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of John Hancock i.e., John Hancock and Smallcap go up and down completely randomly.

Pair Corralation between John Hancock and Smallcap

Considering the 90-day investment horizon John Hancock is expected to generate 2.18 times less return on investment than Smallcap. But when comparing it to its historical volatility, John Hancock Financial is 1.04 times less risky than Smallcap. It trades about 0.06 of its potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,412  in Smallcap Sp 600 on May 18, 2025 and sell it today you would earn a total of  209.00  from holding Smallcap Sp 600 or generate 8.67% return on investment over 90 days.

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

John Hancock Financial  vs.  Smallcap Sp 600

John Hancock Financial

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 4 (%) 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.

Smallcap Sp 600

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Smallcap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with John Hancock and Smallcap

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

The idea behind John Hancock Financial and Smallcap Sp 600 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.