Correlation Between Tekla World and John Hancock

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

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

Diversification Opportunities for Tekla World and John Hancock

0.33

Correlation Coefficient

Tekla World  John Hancock

Weak diversification

The 3 months correlation between Tekla and John is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tekla World Healthcare 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 Tekla World 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 Tekla World Healthcare 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 Tekla World i.e., Tekla World and John Hancock go up and down completely randomly.

Pair Corralation between Tekla World and John Hancock

Considering the 90-day investment horizon Tekla World Healthcare is expected to generate 1.41 times more return on investment than John Hancock. However, Tekla World is 1.41 times more volatile than John Hancock Preferred. It trades about 0.01 of its potential returns per unit of risk. John Hancock Preferred is currently generating about -0.09 per unit of risk. If you would invest  1,218  in Tekla World Healthcare on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Tekla World Healthcare or generate 0.16% return on investment over 90 days.

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

Tekla World Healthcare  vs.  John Hancock Preferred

Tekla World Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla World Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable technical indicators, Tekla World is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

John Hancock Preferred

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tekla World and John Hancock

The main advantage of trading using opposite Tekla World and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla World 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 Tekla World Healthcare 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.