Correlation Between SPDR ICE and John Hancock

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

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

Diversification Opportunities for SPDR ICE and John Hancock

0.2

Correlation Coefficient

SPDR ICE  John Hancock

Modest diversification

The 3 months correlation between SPDR and John is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SPDR ICE Preferred 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 SPDR ICE 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 SPDR ICE 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 Preferred has no effect on the direction of SPDR ICE i.e., SPDR ICE and John Hancock go up and down completely randomly.

Pair Corralation between SPDR ICE and John Hancock

Considering the 90-day investment horizon SPDR ICE is expected to generate 1.67 times less return on investment than John Hancock. In addition to that, SPDR ICE is 2.0 times more volatile than John Hancock Preferred. It trades about 0.05 of its total potential returns per unit of risk. John Hancock Preferred is currently generating about 0.17 per unit of volatility. If you would invest  2,057  in John Hancock Preferred on September 17, 2024 and sell it today you would earn a total of  238.00  from holding John Hancock Preferred or generate 11.57% return on investment over 90 days.

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

SPDR ICE Preferred  vs.  John Hancock Preferred

SPDR ICE Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR ICE Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR ICE is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

John Hancock Preferred

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with SPDR ICE and John Hancock

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

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.