Correlation Between Tekla Healthcare and John Hancock

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare 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 Healthcare 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 Healthcare Investors and John Hancock Financial, you can compare the effects of market volatilities on Tekla Healthcare 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 Healthcare with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and John Hancock.

Diversification Opportunities for Tekla Healthcare and John Hancock

-0.73

Correlation Coefficient

Tekla Healthcare  John Hancock

Pay attention - limited upside

The 3 months correlation between Tekla and John is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Tekla Healthcare 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 Healthcare Investors 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 Financial has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and John Hancock go up and down completely randomly.

Pair Corralation between Tekla Healthcare and John Hancock

Considering the 90-day investment horizon Tekla Healthcare Investors is expected to under-perform the John Hancock. But the stock apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Investors is 1.53 times less risky than John Hancock. The stock trades about -0.11 of its potential returns per unit of risk. The John Hancock Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,246  in John Hancock Financial on September 3, 2024 and sell it today you would earn a total of  694.00  from holding John Hancock Financial or generate 21.38% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  John Hancock Financial

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

John Hancock Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tekla Healthcare and John Hancock

The main advantage of trading using opposite Tekla Healthcare and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare 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 Healthcare Investors and John Hancock Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.