Correlation Between Blackrock Muniyield and John Hancock

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

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

Diversification Opportunities for Blackrock Muniyield and John Hancock

0.6

Correlation Coefficient

Blackrock Muniyield  John Hancock

Poor diversification

The 3 months correlation between Blackrock and John is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality 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 Blackrock Muniyield 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 Blackrock Muniyield Quality 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 Blackrock Muniyield i.e., Blackrock Muniyield and John Hancock go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and John Hancock

Considering the 90-day investment horizon Blackrock Muniyield Quality is expected to generate 1.51 times more return on investment than John Hancock. However, Blackrock Muniyield is 1.51 times more volatile than John Hancock Income. It trades about 0.07 of its potential returns per unit of risk. John Hancock Income is currently generating about -0.04 per unit of risk. If you would invest  1,042  in Blackrock Muniyield Quality on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Blackrock Muniyield Quality or generate 2.5% return on investment over 90 days.

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

Blackrock Muniyield Quality  vs.  John Hancock Income

Blackrock Muniyield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 Blackrock Muniyield and John Hancock

The main advantage of trading using opposite Blackrock Muniyield and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield 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 Blackrock Muniyield Quality 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.