Correlation Between CBH and John Hancock

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

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

Diversification Opportunities for CBH and John Hancock

-0.6

Correlation Coefficient

CBH  John Hancock

Excellent diversification

The 3 months correlation between CBH and John is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CBH and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and CBH 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 CBH 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 Income has no effect on the direction of CBH i.e., CBH and John Hancock go up and down completely randomly.

Pair Corralation between CBH and John Hancock

Considering the 90-day investment horizon CBH is expected to generate 1.29 times less return on investment than John Hancock. But when comparing it to its historical volatility, CBH is 3.14 times less risky than John Hancock. It trades about 0.27 of its potential returns per unit of risk. John Hancock Income is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,077  in John Hancock Income on September 3, 2024 and sell it today you would earn a total of  72.00  from holding John Hancock Income or generate 6.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	49.6%
Values	Daily Returns

CBH  vs.  John Hancock Income

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

John Hancock Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Hancock Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, John Hancock is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CBH and John Hancock

The main advantage of trading using opposite CBH and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBH 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 CBH and John Hancock Income 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.