Correlation Between John Hancock and Nuveen Dynamic

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

Diversification Opportunities for John Hancock and Nuveen Dynamic

0.83

Correlation Coefficient

John Hancock  Nuveen Dynamic

Very poor diversification

The 3 months correlation between John and Nuveen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and Nuveen Dynamic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dynamic Municipal 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 Nuveen Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dynamic Municipal has no effect on the direction of John Hancock i.e., John Hancock and Nuveen Dynamic go up and down completely randomly.

Pair Corralation between John Hancock and Nuveen Dynamic

Considering the 90-day investment horizon John Hancock Preferred is expected to generate 1.87 times more return on investment than Nuveen Dynamic. However, John Hancock is 1.87 times more volatile than Nuveen Dynamic Municipal. It trades about 0.06 of its potential returns per unit of risk. Nuveen Dynamic Municipal is currently generating about 0.1 per unit of risk. If you would invest  1,609  in John Hancock Preferred on December 27, 2024 and sell it today you would earn a total of  49.00  from holding John Hancock Preferred or generate 3.05% 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.  Nuveen Dynamic Municipal

John Hancock Preferred

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 4 (%) 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.

Nuveen Dynamic Municipal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dynamic Municipal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Nuveen Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Nuveen Dynamic

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

The idea behind John Hancock Preferred and Nuveen Dynamic Municipal 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.