Correlation Between John Hancock and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both John Hancock and Principal Lifetime 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 Principal Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Municipal and Principal Lifetime Hybrid, you can compare the effects of market volatilities on John Hancock and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Principal Lifetime.
Diversification Opportunities for John Hancock and Principal Lifetime
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Principal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Municipal and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid 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 Municipal are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of John Hancock i.e., John Hancock and Principal Lifetime go up and down completely randomly.
Pair Corralation between John Hancock and Principal Lifetime
Assuming the 90 days horizon John Hancock is expected to generate 6.71 times less return on investment than Principal Lifetime. But when comparing it to its historical volatility, John Hancock Municipal is 5.84 times less risky than Principal Lifetime. It trades about 0.33 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,543 in Principal Lifetime Hybrid on April 18, 2025 and sell it today you would earn a total of 286.00 from holding Principal Lifetime Hybrid or generate 18.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.36% |
| Values | Daily Returns |
John Hancock Municipal vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| John Hancock Municipal |
| Principal Lifetime Hybrid |
John Hancock and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Principal Lifetime
The main advantage of trading using opposite John Hancock and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| John Hancock vs. The Short Term Municipal | John Hancock vs. Astor Longshort Fund | John Hancock vs. Calamos Longshort Fund | John Hancock vs. Ab Select Longshort |
| Principal Lifetime vs. American High Income Municipal | Principal Lifetime vs. Old Westbury Municipal | Principal Lifetime vs. Fidelity California Municipal | Principal Lifetime vs. Morningstar Municipal Bond |
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 the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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