Correlation Between Nuveen Dynamic and John Hancock

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

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

Diversification Opportunities for Nuveen Dynamic and John Hancock

0.83

Correlation Coefficient

Nuveen Dynamic  John Hancock

Very poor diversification

The 3 months correlation between Nuveen and John is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Dynamic Municipal and John Hancock Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Preferred and Nuveen Dynamic 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 Nuveen Dynamic Municipal 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 Preferred has no effect on the direction of Nuveen Dynamic i.e., Nuveen Dynamic and John Hancock go up and down completely randomly.

Pair Corralation between Nuveen Dynamic and John Hancock

Given the investment horizon of 90 days Nuveen Dynamic is expected to generate 1.2 times less return on investment than John Hancock. But when comparing it to its historical volatility, Nuveen Dynamic Municipal is 1.87 times less risky than John Hancock. It trades about 0.1 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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

Nuveen Dynamic Municipal  vs.  John Hancock Preferred

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.

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.

Pair Trading with Nuveen Dynamic and John Hancock

The main advantage of trading using opposite Nuveen Dynamic and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Dynamic 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 Nuveen Dynamic Municipal and John Hancock Preferred 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.