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 Preferred, 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

0.64

Correlation Coefficient

Flaherty  John Hancock

Poor diversification

The 3 months correlation between Flaherty and John is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty and Crumrine and John Hancock Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Preferred 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 Preferred 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 is expected to generate 1.66 times less return on investment than John Hancock. But when comparing it to its historical volatility, Flaherty and Crumrine is 1.46 times less risky than John Hancock. It trades about 0.06 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,676  in John Hancock Preferred on August 31, 2024 and sell it today you would earn a total of  59.00  from holding John Hancock Preferred or generate 3.52% return on investment over 90 days.

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

Flaherty and Crumrine  vs.  John Hancock Preferred

Flaherty and Crumrine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty and Crumrine are ranked lower than 4 (%) 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 Preferred

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Preferred 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.