Correlation Between CF Acquisition and John Hancock
Can any of the company-specific risk be diversified away by investing in both CF Acquisition 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 CF Acquisition and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Acquisition VII and John Hancock Investors, you can compare the effects of market volatilities on CF Acquisition 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 CF Acquisition with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and John Hancock.
Diversification Opportunities for CF Acquisition and John Hancock
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CFFS and John is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition VII and John Hancock Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Investors and CF Acquisition 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 CF Acquisition VII 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 Investors has no effect on the direction of CF Acquisition i.e., CF Acquisition and John Hancock go up and down completely randomly.
Pair Corralation between CF Acquisition and John Hancock
Given the investment horizon of 90 days CF Acquisition VII is expected to generate 0.87 times more return on investment than John Hancock. However, CF Acquisition VII is 1.15 times less risky than John Hancock. It trades about 0.17 of its potential returns per unit of risk. John Hancock Investors is currently generating about 0.12 per unit of risk. If you would invest 1,110 in CF Acquisition VII on September 2, 2024 and sell it today you would earn a total of 10.00 from holding CF Acquisition VII or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Acquisition VII vs. John Hancock Investors
Performance |
| Timeline |
| CF Acquisition VII |
| John Hancock Investors |
CF Acquisition and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and John Hancock
The main advantage of trading using opposite CF Acquisition and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition 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 CF Acquisition VII and John Hancock Investors 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.| John Hancock vs. DTF Tax Free | John Hancock vs. MFS Investment Grade | John Hancock vs. Eaton Vance National | John Hancock vs. Invesco High Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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