Correlation Between The National and John Hancock

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

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

Diversification Opportunities for The National and John Hancock

0.87

Correlation Coefficient

The National  John Hancock

Very poor diversification

The 3 months correlation between The and John is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and John Hancock Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Bond and The National 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 The National Tax Free 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 Bond has no effect on the direction of The National i.e., The National and John Hancock go up and down completely randomly.

Pair Corralation between The National and John Hancock

Assuming the 90 days horizon The National is expected to generate 15.36 times less return on investment than John Hancock. But when comparing it to its historical volatility, The National Tax Free is 1.72 times less risky than John Hancock. It trades about 0.02 of its potential returns per unit of risk. John Hancock Bond is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,317  in John Hancock Bond on December 26, 2024 and sell it today you would earn a total of  34.00  from holding John Hancock Bond or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

The National Tax Free  vs.  John Hancock Bond

National Tax

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The National Tax Free are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, The National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The National and John Hancock

The main advantage of trading using opposite The National and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National 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 The National Tax Free and John Hancock Bond 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.