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 Preferred and John Hancock Tax, 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

0.28

Correlation Coefficient

Flaherty Crumrine  John Hancock

Modest diversification

The 3 months correlation between Flaherty and John is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred and John Hancock Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Tax 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 Preferred 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 Tax 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 7.47 times less return on investment than John Hancock. But when comparing it to its historical volatility, Flaherty Crumrine Preferred is 1.39 times less risky than John Hancock. It trades about 0.02 of its potential returns per unit of risk. John Hancock Tax is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,297  in John Hancock Tax on August 31, 2024 and sell it today you would earn a total of  58.00  from holding John Hancock Tax or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Flaherty Crumrine Preferred  vs.  John Hancock Tax

Flaherty Crumrine

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

John Hancock Tax

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Tax are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather inconsistent basic indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 Preferred and John Hancock Tax 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.