Correlation Between John Hancock and Flaherty Crumrine

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

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

Diversification Opportunities for John Hancock and Flaherty Crumrine

0.8

Correlation Coefficient

John Hancock  Flaherty Crumrine

Very poor diversification

The 3 months correlation between John and Flaherty is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and Flaherty Crumrine Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine Total and John Hancock 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 John Hancock Preferred are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine Total has no effect on the direction of John Hancock i.e., John Hancock and Flaherty Crumrine go up and down completely randomly.

Pair Corralation between John Hancock and Flaherty Crumrine

Considering the 90-day investment horizon John Hancock Preferred is expected to under-perform the Flaherty Crumrine. In addition to that, John Hancock is 1.82 times more volatile than Flaherty Crumrine Total. It trades about -0.03 of its total potential returns per unit of risk. Flaherty Crumrine Total is currently generating about 0.04 per unit of volatility. If you would invest  1,666  in Flaherty Crumrine Total on September 12, 2024 and sell it today you would earn a total of  22.00  from holding Flaherty Crumrine Total or generate 1.32% return on investment over 90 days.

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

John Hancock Preferred  vs.  Flaherty Crumrine Total

John Hancock Preferred

Risk-Adjusted Performance

0 of 100

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.

Flaherty Crumrine Total

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Total are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Flaherty Crumrine is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with John Hancock and Flaherty Crumrine

The main advantage of trading using opposite John Hancock and Flaherty Crumrine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Flaherty Crumrine 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 Flaherty Crumrine will offset losses from the drop in Flaherty Crumrine's long position.

The idea behind John Hancock Preferred and Flaherty Crumrine Total 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.