Correlation Between Pimco Corporate and John Hancock

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

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

Diversification Opportunities for Pimco Corporate and John Hancock

0.5

Correlation Coefficient

Pimco Corporate  John Hancock

Very weak diversification

The 3 months correlation between Pimco and John is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income 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 Pimco Corporate 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 Pimco Corporate Income 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 Pimco Corporate i.e., Pimco Corporate and John Hancock go up and down completely randomly.

Pair Corralation between Pimco Corporate and John Hancock

Considering the 90-day investment horizon Pimco Corporate Income is expected to generate 0.58 times more return on investment than John Hancock. However, Pimco Corporate Income is 1.72 times less risky than John Hancock. It trades about 0.22 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.05 per unit of risk. If you would invest  1,320  in Pimco Corporate Income on September 4, 2024 and sell it today you would earn a total of  91.00  from holding Pimco Corporate Income or generate 6.89% return on investment over 90 days.

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

Pimco Corporate Income  vs.  John Hancock Preferred

Pimco Corporate Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of very inconsistent fundamental indicators, Pimco Corporate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

John Hancock Preferred

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Preferred are ranked lower than 4 (%) 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 Pimco Corporate and John Hancock

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

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.