Correlation Between John Hancock and Blackrock Muniyield

Can any of the company-specific risk be diversified away by investing in both John Hancock and Blackrock Muniyield 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 Blackrock Muniyield 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 Blackrock Muniyield Quality, you can compare the effects of market volatilities on John Hancock and Blackrock Muniyield 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 Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Blackrock Muniyield.

Diversification Opportunities for John Hancock and Blackrock Muniyield

0.62

Correlation Coefficient

John Hancock  Blackrock Muniyield

Poor diversification

The 3 months correlation between John and Blackrock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield 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 Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of John Hancock i.e., John Hancock and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between John Hancock and Blackrock Muniyield

Considering the 90-day investment horizon John Hancock Preferred is expected to generate 1.24 times more return on investment than Blackrock Muniyield. However, John Hancock is 1.24 times more volatile than Blackrock Muniyield Quality. It trades about 0.02 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about -0.03 per unit of risk. If you would invest  1,721  in John Hancock Preferred on December 1, 2024 and sell it today you would earn a total of  13.00  from holding John Hancock Preferred or generate 0.76% return on investment over 90 days.

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

John Hancock Preferred  vs.  Blackrock Muniyield Quality

John Hancock Preferred

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Blackrock Muniyield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniyield Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with John Hancock and Blackrock Muniyield

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

The idea behind John Hancock Preferred and Blackrock Muniyield Quality 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.