Correlation Between Flaherty and John Hancock

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

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

Diversification Opportunities for Flaherty and John Hancock

0.13

Correlation Coefficient

Flaherty  John Hancock

Average diversification

The 3 months correlation between Flaherty and John is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty and Crumrine 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 Flaherty 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 Flaherty and Crumrine 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 Flaherty i.e., Flaherty and John Hancock go up and down completely randomly.

Pair Corralation between Flaherty and John Hancock

Considering the 90-day investment horizon Flaherty and Crumrine is expected to generate 0.38 times more return on investment than John Hancock. However, Flaherty and Crumrine is 2.66 times less risky than John Hancock. It trades about 0.12 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.0 per unit of risk. If you would invest  1,952  in Flaherty and Crumrine on December 28, 2024 and sell it today you would earn a total of  75.00  from holding Flaherty and Crumrine or generate 3.84% return on investment over 90 days.

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

Flaherty and Crumrine  vs.  John Hancock Financial

Flaherty and Crumrine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty and Crumrine are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Flaherty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

John Hancock Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Flaherty and John Hancock

The main advantage of trading using opposite Flaherty and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty 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 Flaherty and Crumrine 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 Commodity Directory module to find actively traded commodities issued by global exchanges.