Correlation Between John Hancock and Tri-ContinentalPFD

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

By analyzing existing cross correlation between John Hancock Income and Tri Continental PFD, you can compare the effects of market volatilities on John Hancock and Tri-ContinentalPFD 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 Tri-ContinentalPFD. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Tri-ContinentalPFD.

Diversification Opportunities for John Hancock and Tri-ContinentalPFD

0.29

Correlation Coefficient

John Hancock  Tri-ContinentalPFD

Modest diversification

The 3 months correlation between John and Tri-ContinentalPFD is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and Tri Continental PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental PFD 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 Income are associated (or correlated) with Tri-ContinentalPFD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental PFD has no effect on the direction of John Hancock i.e., John Hancock and Tri-ContinentalPFD go up and down completely randomly.

Pair Corralation between John Hancock and Tri-ContinentalPFD

Considering the 90-day investment horizon John Hancock is expected to generate 1.14 times less return on investment than Tri-ContinentalPFD. But when comparing it to its historical volatility, John Hancock Income is 1.31 times less risky than Tri-ContinentalPFD. It trades about 0.04 of its potential returns per unit of risk. Tri Continental PFD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,438  in Tri Continental PFD on December 25, 2024 and sell it today you would earn a total of  53.00  from holding Tri Continental PFD or generate 1.19% return on investment over 90 days.

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

John Hancock Income  vs.  Tri Continental PFD

John Hancock Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Income are ranked lower than 3 (%) 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.

Tri Continental PFD

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Continental PFD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tri-ContinentalPFD is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with John Hancock and Tri-ContinentalPFD

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

The idea behind John Hancock Income and Tri Continental PFD 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.