Correlation Between John Hancock and Flaherty Crumrine

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

By analyzing existing cross correlation between John Hancock Premium and Flaherty Crumrine Preferredome, you can compare the effects of market volatilities on John Hancock and Flaherty Crumrine 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 Flaherty Crumrine. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Flaherty Crumrine.

Diversification Opportunities for John Hancock and Flaherty Crumrine

0.68

Correlation Coefficient

John Hancock  Flaherty Crumrine

Poor diversification

The 3 months correlation between John and Flaherty is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Premium and Flaherty Crumrine Preferredome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine 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 Premium are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of John Hancock i.e., John Hancock and Flaherty Crumrine go up and down completely randomly.

Pair Corralation between John Hancock and Flaherty Crumrine

Considering the 90-day investment horizon John Hancock Premium is expected to generate 1.24 times more return on investment than Flaherty Crumrine. However, John Hancock is 1.24 times more volatile than Flaherty Crumrine Preferredome. It trades about 0.16 of its potential returns per unit of risk. Flaherty Crumrine Preferredome is currently generating about 0.15 per unit of risk. If you would invest  1,111  in John Hancock Premium on August 31, 2024 and sell it today you would earn a total of  212.00  from holding John Hancock Premium or generate 19.08% return on investment over 90 days.

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

John Hancock Premium  vs.  Flaherty Crumrine Preferredome

John Hancock Premium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Premium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, John Hancock is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Flaherty Crumrine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flaherty Crumrine Preferredome has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with John Hancock and Flaherty Crumrine

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

The idea behind John Hancock Premium and Flaherty Crumrine Preferredome 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.