Correlation Between John Hancock and Cliffwater Corporate

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

Diversification Opportunities for John Hancock and Cliffwater Corporate

-0.17

Correlation Coefficient

John Hancock  Cliffwater Corporate

Good diversification

The 3 months correlation between John and Cliffwater is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate 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 Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of John Hancock i.e., John Hancock and Cliffwater Corporate go up and down completely randomly.

Pair Corralation between John Hancock and Cliffwater Corporate

Considering the 90-day investment horizon John Hancock Financial is expected to generate 35.18 times more return on investment than Cliffwater Corporate. However, John Hancock is 35.18 times more volatile than Cliffwater Corporate Lending. It trades about 0.18 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.97 per unit of risk. If you would invest  3,530  in John Hancock Financial on October 25, 2024 and sell it today you would earn a total of  187.00  from holding John Hancock Financial or generate 5.3% return on investment over 90 days.

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

John Hancock Financial  vs.  Cliffwater Corporate Lending

John Hancock Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Cliffwater Corporate

Risk-Adjusted Performance

64 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 64 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cliffwater Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Cliffwater Corporate

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

The idea behind John Hancock Financial and Cliffwater Corporate Lending 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.