Correlation Between FAM and John Hancock

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

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

Diversification Opportunities for FAM and John Hancock

0.0

Correlation Coefficient

FAM  John Hancock

Pay attention - limited upside

The 3 months correlation between FAM and John is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FAM 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 FAM 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 FAM 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 FAM i.e., FAM and John Hancock go up and down completely randomly.

Pair Corralation between FAM and John Hancock

If you would invest  1,717  in John Hancock Preferred on November 29, 2024 and sell it today you would earn a total of  7.00  from holding John Hancock Preferred or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FAM  vs.  John Hancock Preferred

FAM

Risk-Adjusted Performance

Very Weak

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

John Hancock Preferred

Risk-Adjusted Performance

Very Weak

Over the last 90 days John Hancock Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FAM and John Hancock

The main advantage of trading using opposite FAM and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAM 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 FAM 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.