Correlation Between Vanguard Target and John Hancock

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Can any of the company-specific risk be diversified away by investing in both Vanguard Target 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 Vanguard Target and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Target Retirement and John Hancock Funds, you can compare the effects of market volatilities on Vanguard Target 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 Vanguard Target with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and John Hancock.

Diversification Opportunities for Vanguard Target and John Hancock

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and JLKLX is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and John Hancock Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Funds and Vanguard Target 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 Vanguard Target Retirement 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 Funds has no effect on the direction of Vanguard Target i.e., Vanguard Target and John Hancock go up and down completely randomly.

Pair Corralation between Vanguard Target and John Hancock

Assuming the 90 days horizon Vanguard Target Retirement is expected to generate 0.92 times more return on investment than John Hancock. However, Vanguard Target Retirement is 1.09 times less risky than John Hancock. It trades about -0.01 of its potential returns per unit of risk. John Hancock Funds is currently generating about -0.01 per unit of risk. If you would invest  4,461  in Vanguard Target Retirement on July 8, 2022 and sell it today you would lose (306.00)  from holding Vanguard Target Retirement or give up 6.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Vanguard Target Retirement  vs.  John Hancock Funds

 Performance (%) 
       Timeline  
Vanguard Target Reti 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Target Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Price Channel

John Hancock Funds 
JLKLX Performance
0 of 100
Over the last 90 days John Hancock Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, John Hancock is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

JLKLX Price Channel

Vanguard Target and John Hancock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Target and John Hancock

The main advantage of trading using opposite Vanguard Target and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target 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.
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The idea behind Vanguard Target Retirement and John Hancock Funds 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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Check out your portfolio center. 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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