Correlation Between Flaherty Crumrine and John Hancock

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

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

Diversification Opportunities for Flaherty Crumrine and John Hancock

0.65

Correlation Coefficient

Flaherty Crumrine  John Hancock

Poor diversification

The 3 months correlation between Flaherty and John is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferredome and John Hancock Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Premium and Flaherty Crumrine 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 Flaherty Crumrine Preferredome 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 Premium has no effect on the direction of Flaherty Crumrine i.e., Flaherty Crumrine and John Hancock go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and John Hancock

Considering the 90-day investment horizon Flaherty Crumrine is expected to generate 12.79 times less return on investment than John Hancock. But when comparing it to its historical volatility, Flaherty Crumrine Preferredome is 1.41 times less risky than John Hancock. It trades about 0.01 of its potential returns per unit of risk. John Hancock Premium is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,290  in John Hancock Premium on September 3, 2024 and sell it today you would earn a total of  33.00  from holding John Hancock Premium or generate 2.56% return on investment over 90 days.

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

Flaherty Crumrine Preferredome  vs.  John Hancock Premium

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.

John Hancock Premium

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Flaherty Crumrine and John Hancock

The main advantage of trading using opposite Flaherty Crumrine and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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 Flaherty Crumrine Preferredome and John Hancock Premium 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 Anywhere module to track or share privately all of your investments from the convenience of any device.