Correlation Between John Hancock and Ellsworth Convertible

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

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

Diversification Opportunities for John Hancock and Ellsworth Convertible

0.71

Correlation Coefficient

John Hancock  Ellsworth Convertible

Poor diversification

The 3 months correlation between John and Ellsworth is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Hedged and Ellsworth Convertible Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Convertible 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 Hedged are associated (or correlated) with Ellsworth Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Convertible has no effect on the direction of John Hancock i.e., John Hancock and Ellsworth Convertible go up and down completely randomly.

Pair Corralation between John Hancock and Ellsworth Convertible

Considering the 90-day investment horizon John Hancock is expected to generate 4.73 times less return on investment than Ellsworth Convertible. But when comparing it to its historical volatility, John Hancock Hedged is 1.23 times less risky than Ellsworth Convertible. It trades about 0.01 of its potential returns per unit of risk. Ellsworth Convertible Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  736.00  in Ellsworth Convertible Growth on August 17, 2024 and sell it today you would earn a total of  217.00  from holding Ellsworth Convertible Growth or generate 29.48% return on investment over 90 days.

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

John Hancock Hedged  vs.  Ellsworth Convertible Growth

John Hancock Hedged

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Hedged are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Ellsworth Convertible

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ellsworth Convertible Growth are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ellsworth Convertible reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John Hancock and Ellsworth Convertible

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

The idea behind John Hancock Hedged and Ellsworth Convertible Growth 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.