Correlation Between DTF Tax and John Hancock

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

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

Diversification Opportunities for DTF Tax and John Hancock

0.14

Correlation Coefficient

DTF Tax  John Hancock

Average diversification

The 3 months correlation between DTF and John is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and DTF Tax 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 DTF 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 Income has no effect on the direction of DTF Tax i.e., DTF Tax and John Hancock go up and down completely randomly.

Pair Corralation between DTF Tax and John Hancock

Considering the 90-day investment horizon DTF Tax Free is expected to generate 0.69 times more return on investment than John Hancock. However, DTF Tax Free is 1.45 times less risky than John Hancock. It trades about 0.14 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.04 per unit of risk. If you would invest  1,100  in DTF Tax Free on December 26, 2024 and sell it today you would earn a total of  30.00  from holding DTF Tax Free or generate 2.73% return on investment over 90 days.

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

DTF Tax Free  vs.  John Hancock Income

DTF Tax Free

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DTF Tax Free are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DTF Tax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

John Hancock Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, John Hancock is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DTF Tax and John Hancock

The main advantage of trading using opposite DTF Tax and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTF Tax 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 DTF Tax Free and John Hancock Income 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.