Correlation Between Federated Premier and John Hancock

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

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

Diversification Opportunities for Federated Premier and John Hancock

0.16

Correlation Coefficient

Federated Premier  John Hancock

Average diversification

The 3 months correlation between Federated and John is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal 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 Federated Premier 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 Federated Premier Municipal 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 Federated Premier i.e., Federated Premier and John Hancock go up and down completely randomly.

Pair Corralation between Federated Premier and John Hancock

Considering the 90-day investment horizon Federated Premier is expected to generate 27.41 times less return on investment than John Hancock. In addition to that, Federated Premier is 1.24 times more volatile than John Hancock Income. It trades about 0.0 of its total potential returns per unit of risk. John Hancock Income is currently generating about 0.1 per unit of volatility. If you would invest  1,101  in John Hancock Income on December 28, 2024 and sell it today you would earn a total of  31.00  from holding John Hancock Income or generate 2.82% return on investment over 90 days.

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

Federated Premier Municipal  vs.  John Hancock Income

Federated Premier

Risk-Adjusted Performance

Very Weak

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

John Hancock Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 7 (%) 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 Federated Premier and John Hancock

The main advantage of trading using opposite Federated Premier and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier 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 Federated Premier Municipal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.