Correlation Between Large Capitalization and John Hancock

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

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

Diversification Opportunities for Large Capitalization and John Hancock

0.85

Correlation Coefficient

Large Capitalization  John Hancock

Very poor diversification

The 3 months correlation between Large and John is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Large Capitalization Growth and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Large Capitalization 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 Large Capitalization Growth 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 Financial has no effect on the direction of Large Capitalization i.e., Large Capitalization and John Hancock go up and down completely randomly.

Pair Corralation between Large Capitalization and John Hancock

Assuming the 90 days horizon Large Capitalization Growth is expected to generate 0.8 times more return on investment than John Hancock. However, Large Capitalization Growth is 1.25 times less risky than John Hancock. It trades about 0.28 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.1 per unit of risk. If you would invest  499.00  in Large Capitalization Growth on May 2, 2025 and sell it today you would earn a total of  84.00  from holding Large Capitalization Growth or generate 16.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Large Capitalization Growth  vs.  John Hancock Financial

Large Capitalization

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Capitalization Growth are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Large Capitalization showed solid returns over the last few months and may actually be approaching a breakup point.

John Hancock Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Large Capitalization and John Hancock

The main advantage of trading using opposite Large Capitalization and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Capitalization 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 Large Capitalization Growth and John Hancock Financial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.