Correlation Between Blackrock Muniholdings and John Hancock

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

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

Diversification Opportunities for Blackrock Muniholdings and John Hancock

0.32

Correlation Coefficient

Blackrock Muniholdings  John Hancock

Weak diversification

The 3 months correlation between Blackrock and John is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Blackrock Muniholdings 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 Blackrock Muniholdings Quality 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 Financial has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and John Hancock go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and John Hancock

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 2.04 times less return on investment than John Hancock. But when comparing it to its historical volatility, Blackrock Muniholdings Quality is 3.29 times less risky than John Hancock. It trades about 0.06 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,767  in John Hancock Financial on September 15, 2024 and sell it today you would earn a total of  923.00  from holding John Hancock Financial or generate 33.36% return on investment over 90 days.

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

Blackrock Muniholdings Quality  vs.  John Hancock Financial

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

John Hancock Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Muniholdings and John Hancock

The main advantage of trading using opposite Blackrock Muniholdings and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings 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 Blackrock Muniholdings Quality and John Hancock Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.